Robust planting season mirroring good weather (Grain Marketing)
(Editor’s note: John Hall is a professional commodities analyst.)
Planting season has been robust across the United States.
The Crop Progress Report released on May 15 listed corn at 65-percent planted — which is well ahead of the 59-percent, five-year average.
Beans were reported at 49-percent planted, also ahead of the 36-percent, five-year average for this time.
Spring wheat planting was reported at 40-percent complete, which was well behind the 57-percent, five-year average for this time.
This planting pace reflects weather in the respective growing areas.
The news has reported severe weather in many areas of the wheat belt recently.
If you recall, the North Dakota grower’s survey collected for the March 30 acreage report showed a significant increase in corn and bean acres there.
The Crop Progress Report released on May 15 had only 5 percent of the corn crop and only 2 percent of the beans planted there.
We need to continue to monitor their planting progress.
Early planting suggests high yields, provided we get good weather.
Issues in North Dakota could alter the current picture if its farmers get weather issues over the next few weeks.
Current weather forecasts call for suitable weather over most of the Corn Belt.
Last month’s NOAA forecast suggested favorable moisture and temperatures for June-August.
The new forecast had not been released at this writing.
The recent grain markets have been discouraging.
On May 18, July corn closed at $5.53 while new crop December corn closed at $4.93.
New crop November soybeans closed at $11.80 while July wheat futures closed at $6.10.
These price trends are discouraging but it seems they reflect world supplies at this time.
A recent article entitled: “Global Corn, Wheat Production Forecast at a Record, While El Niño ‘a Potent New Variable’ on May 16 by Keith Good and found at farmdoc posted that last week, the USDA’s Foreign Agricultural Service indicated that, “Global corn production is forecast to sharply increase, driven primarily by a forecast of continued high production in Brazil and rebounds in the United States and Argentina.”
On May 17, in an article entitled: “Global Soybean Production Forecast at Record Level, on Record Crops in Brazil, U.S.” compiled by Good, the USDA’s Economic Research Service indicated that, “U.S. soybean production for the 2023-24 marketing year (MY) is projected to climb by more than 5 percent to a record high of 4.5 billion bushels based on higher yield and marginally higher planted area.
The yield forecast of 52.0 bushels per acre is based on a weather-adjusted trend, assuming normal weather during the growing season.”
So production is up — the problem is usage.
Exports have fallen for both corn and beans in the United States. Last week China canceled another order for corn.
Allendale wrote that the trade was a little surprised to see Chinese buyers cancel another 272,000 tonnes, 10.7 million bushels, of old crop U.S. corn.
Its three most recent prior actions were: 272,000 on May 9; 233,400 on April 27; and 327,000 on April 24.
In the trade’s mind the issue is not just that 10.7 million bushels have to be put back on the shelf.
It is that China still has 2.3 million tonnes of unshipped old crop U.S. corn on the books. There remain concerns over the fate of the current orders. With the current slide in our prices, the current Brazilian export price discount to only $16 per tonne, 41 cents per bushel less. It had been $30 cheaper three weeks ago.
With the decline in exports, ending stocks have risen as the top chart clearly shows.
I am sorry to say the trend for soybeans is similar.
Currently Brazil’s beans are $1.55 per bushel cheaper than ours, as can be seen in the middle chart.
World politics continues to affect our grain prices.
China has been a big buyer in the past.
However, it appears that China is creating alliances with other countries that are hurting our ability to compete in the world market.
Robin Brooks shared the following tweet (along with the bottom chart) last week: “China in April 2023 exported so much to Russia that its exports (blue) exceeded imports (red). Big picture: (i) we pay Russia for energy; (ii) Russia buys what it needs from China.
“Western measures aren’t stopping Russia’s war machine and don’t deter other c/a surplus autocrats.”
(Note: I research material from Allendale, DTN, USDA, University Land Grants and other credible sources in compiling this article. It is not merely my opinion, but rather a consensus of experts in the trade. Looking for a marketing coach or someone to discuss strategies with? Contact me at email@example.com, or call 410-708-8781.)