Weekly Crop Commentary - 4/1/2022
Apr 01, 2022
Ed Nienaber
Vice President, Grain Division
The grain markets are working feverously today to buy more corn acres, post-release of this week’s USDA crop report. (See below for more information from my colleagues). With April here, we will focus weekly on planted acres and weather forecast. Grain prices will continue to be well supported by the current geopolitical conflicts, as well as southern hemisphere final crop production. Basis in Ohio this spring and summer will be at the mercy of local processors, as ending corn stocks are predicted to double last year’s figure. With ethanol margins running in the black again and the possibility of granting 15% blend, this could all change. Soybeans are a totally different story with crush margins continuing to be very good and carry-over to be cut in half from last year’s ending stocks. If the weather does not cooperate and give us a chance to get crops planted, this could be another crazy summer. To be honest. I have never seen anything like what we are experiencing in my 45 plus years in the grain industry. Grain trading today is not for the faint of heart! Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon and welcome to April. Hope you all enjoyed the April fools joke this morning. I wasn’t a fan, so there’s my vote. We got our planting intentions and quarterly stocks report from the USDA yesterday, and true to fashion they had a few exciting revelations. Corn planting intentions were probably the most noticeable as they see 89.5 million acres being planted. This was well below the 92 million acres estimate and well below last year's 93.3 million acres. Will this be the lowest corn acreage number we see from them?? The job of the market is to make sure that is the lowest number, so we're off to the races in new crop corn. Other coarse grain acres are also down 800,000 acres from what was planted last year. Durum wheat intentions are up 280,000 acres or 17% year on year. Soybeans and cotton seem to be the choice of farmers in the south, as we saw a massive change in acres. Ohio farmers are planning to swap out 200,000 acres from corn to beans this spring according to this report. As far as the stocks report we have 150 million bushels of corn more than this time last year as a nation. Ohio stocks of corn at 50 million bushels higher than a year ago, and over half that increase looks to still be on the farm. Lots of corn need to move to the market yet. Soybean stocks as a nation were a whopping 370 million bushels higher than a year ago. States to the west of the Mississippi River seem to be the biggest gainers, but here in Ohio, we have 20 million bushels more than last year. All eyes are going to be looking on the planting weather, and this will likely keep basis steady on cash crops for now. Thanks, and have a great weekend.
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
Well, it was a quiet week until noon yesterday, then the USDA dropped the bomb on planted acres. We moved around 2.5 million acres from corn to beans. This sent corn higher and beans sharply lower. We still have to see what Mother Nature does over the next 6 to 8 weeks and if we see the corn number go back higher. They had Ohio down 200,000 acres of corn from last year. That to me is a little surprise as most customers I have talked with were not going to really change their rotations.
Farmer movement of corn and soybeans has slowed over the last couple of weeks as you have found better things to do than haul grain. With the jump in corn prices back to the $7.00 level we will see if you have an appetite to sell more old corn. It seems that the end-users out here are still getting plenty of corn and beans as their hours have been limited and their basis has been steady to weaker.
It is a long time until harvest and with yesterday’s report, we are going to need to plant everything we said we are to corn and pray for good yields because if we have issues, it could make the corn market very interesting going forward.
Lisa Warne
Grain Operation, Mechanicsburg (Region 3)
Good afternoon! USDA threw a curveball yesterday with record soybean planting intentions of 90.96 million acres. This breaks the previous record in 2017 of 90.2 million. Prospective corn acres came in at 89.49 million, even below the lowest analyst estimate. This would be a switch from last year of nearly 4 million acres from corn to soybeans. If realized, it would be only the third time in U.S. history that we will have planted more soybean acres than corn. The new-crop soybean-to-corn price ratio for much of the last two months has been around 2.3, but that dropped to 2.05 post report, indicating the market is working to switch some intended acres back to corn.
Early in the week, markets saw profit-taking from speculators as we lost some war premium in hopes for de-escalation between Ukraine and Russia when officials met face to face in Turkey. Despite those talks though, the war continues. China’s COVID lockdown in Shanghai has also put some pressure on soybeans.
Brazil is 75% harvested on soybeans, 6 points ahead of last year. Analysts are keeping an eye on drier weather models there concerning the safrinha corn crop in the state of Mato Grosso. As the crop heads into pollination, it is important they receive timely rains. With the loss of Ukraine's corn exports, global supply will need Brazil to have a successful second corn crop. Argentina's soybean harvest is at 19% and corn at 14%, but they claim there may be more production losses due to frosts over the last ten days. Domestically, Louisiana and Texas have planted 51% of their corn, Texas being 5 points ahead of this time last year. As I watch snow flurries out the window this morning, I’m hearing of guys itching to get beans in the ground. It is officially Spring, whether the temperature feels like it or not! Have a great weekend, all.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon, this week’s highly anticipated prospective planting report from USDA came out yesterday and the acre numbers for corn and beans were not what the market was thinking. The average trade guess for corn was at 92 million acres and USDA said that we are going to plant 89.5 million acres and soybeans average trade guess was 88.7 million acres and USDA said we are going to plant just shy of 91 million acres. The markets reacted like one might think and corn was up strong, and beans were down hard. So where do we go from here. There is a lot we could talk about, but we don’t have the time or the space to discuss it all in this column. But here are a couple of thigs to continue to keep focused on as we go through this growing season. What will get planted, harvested, & exported this year in Ukraine? The Ukraine farmer has a will do attitude but most think that the acres they do get planted will be limited. If you pull out the U.S. and China’s corn stocks out of the world balance sheet, we see that stocks are at historically tight levels. We know that China is not a shipper of corn and that they are a buyer and they have been building their stocks up. So that brings us back to the U.S. We cannot afford to have any growing issues here in the U.S. growing season and anytime that we might anticipate that the market will stay on edge and could add a premium to it. Very respected people in the ag industry think that the next 12-18 months will be critical in the world supply for grains. The next issue to pay close attention to is what inflation continues to do here in the U.S. Index funds continue to move towards increasing their open interest in commodities. As we see inflation increasing, we are seeing the index funds rebalance their portfolio and use commodities as a hedge against inflation. The index funds invest for the long term not for short term gains. These are a couple of things to continue to pay attention longer term. If you have questions and would like to discuss these issues further feel free to call me at any time. Have a great weekend.
Vice President, Grain Division
The grain markets are working feverously today to buy more corn acres, post-release of this week’s USDA crop report. (See below for more information from my colleagues). With April here, we will focus weekly on planted acres and weather forecast. Grain prices will continue to be well supported by the current geopolitical conflicts, as well as southern hemisphere final crop production. Basis in Ohio this spring and summer will be at the mercy of local processors, as ending corn stocks are predicted to double last year’s figure. With ethanol margins running in the black again and the possibility of granting 15% blend, this could all change. Soybeans are a totally different story with crush margins continuing to be very good and carry-over to be cut in half from last year’s ending stocks. If the weather does not cooperate and give us a chance to get crops planted, this could be another crazy summer. To be honest. I have never seen anything like what we are experiencing in my 45 plus years in the grain industry. Grain trading today is not for the faint of heart! Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon and welcome to April. Hope you all enjoyed the April fools joke this morning. I wasn’t a fan, so there’s my vote. We got our planting intentions and quarterly stocks report from the USDA yesterday, and true to fashion they had a few exciting revelations. Corn planting intentions were probably the most noticeable as they see 89.5 million acres being planted. This was well below the 92 million acres estimate and well below last year's 93.3 million acres. Will this be the lowest corn acreage number we see from them?? The job of the market is to make sure that is the lowest number, so we're off to the races in new crop corn. Other coarse grain acres are also down 800,000 acres from what was planted last year. Durum wheat intentions are up 280,000 acres or 17% year on year. Soybeans and cotton seem to be the choice of farmers in the south, as we saw a massive change in acres. Ohio farmers are planning to swap out 200,000 acres from corn to beans this spring according to this report. As far as the stocks report we have 150 million bushels of corn more than this time last year as a nation. Ohio stocks of corn at 50 million bushels higher than a year ago, and over half that increase looks to still be on the farm. Lots of corn need to move to the market yet. Soybean stocks as a nation were a whopping 370 million bushels higher than a year ago. States to the west of the Mississippi River seem to be the biggest gainers, but here in Ohio, we have 20 million bushels more than last year. All eyes are going to be looking on the planting weather, and this will likely keep basis steady on cash crops for now. Thanks, and have a great weekend.
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
Well, it was a quiet week until noon yesterday, then the USDA dropped the bomb on planted acres. We moved around 2.5 million acres from corn to beans. This sent corn higher and beans sharply lower. We still have to see what Mother Nature does over the next 6 to 8 weeks and if we see the corn number go back higher. They had Ohio down 200,000 acres of corn from last year. That to me is a little surprise as most customers I have talked with were not going to really change their rotations.
Farmer movement of corn and soybeans has slowed over the last couple of weeks as you have found better things to do than haul grain. With the jump in corn prices back to the $7.00 level we will see if you have an appetite to sell more old corn. It seems that the end-users out here are still getting plenty of corn and beans as their hours have been limited and their basis has been steady to weaker.
It is a long time until harvest and with yesterday’s report, we are going to need to plant everything we said we are to corn and pray for good yields because if we have issues, it could make the corn market very interesting going forward.
Lisa Warne
Grain Operation, Mechanicsburg (Region 3)
Good afternoon! USDA threw a curveball yesterday with record soybean planting intentions of 90.96 million acres. This breaks the previous record in 2017 of 90.2 million. Prospective corn acres came in at 89.49 million, even below the lowest analyst estimate. This would be a switch from last year of nearly 4 million acres from corn to soybeans. If realized, it would be only the third time in U.S. history that we will have planted more soybean acres than corn. The new-crop soybean-to-corn price ratio for much of the last two months has been around 2.3, but that dropped to 2.05 post report, indicating the market is working to switch some intended acres back to corn.
Early in the week, markets saw profit-taking from speculators as we lost some war premium in hopes for de-escalation between Ukraine and Russia when officials met face to face in Turkey. Despite those talks though, the war continues. China’s COVID lockdown in Shanghai has also put some pressure on soybeans.
Brazil is 75% harvested on soybeans, 6 points ahead of last year. Analysts are keeping an eye on drier weather models there concerning the safrinha corn crop in the state of Mato Grosso. As the crop heads into pollination, it is important they receive timely rains. With the loss of Ukraine's corn exports, global supply will need Brazil to have a successful second corn crop. Argentina's soybean harvest is at 19% and corn at 14%, but they claim there may be more production losses due to frosts over the last ten days. Domestically, Louisiana and Texas have planted 51% of their corn, Texas being 5 points ahead of this time last year. As I watch snow flurries out the window this morning, I’m hearing of guys itching to get beans in the ground. It is officially Spring, whether the temperature feels like it or not! Have a great weekend, all.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon, this week’s highly anticipated prospective planting report from USDA came out yesterday and the acre numbers for corn and beans were not what the market was thinking. The average trade guess for corn was at 92 million acres and USDA said that we are going to plant 89.5 million acres and soybeans average trade guess was 88.7 million acres and USDA said we are going to plant just shy of 91 million acres. The markets reacted like one might think and corn was up strong, and beans were down hard. So where do we go from here. There is a lot we could talk about, but we don’t have the time or the space to discuss it all in this column. But here are a couple of thigs to continue to keep focused on as we go through this growing season. What will get planted, harvested, & exported this year in Ukraine? The Ukraine farmer has a will do attitude but most think that the acres they do get planted will be limited. If you pull out the U.S. and China’s corn stocks out of the world balance sheet, we see that stocks are at historically tight levels. We know that China is not a shipper of corn and that they are a buyer and they have been building their stocks up. So that brings us back to the U.S. We cannot afford to have any growing issues here in the U.S. growing season and anytime that we might anticipate that the market will stay on edge and could add a premium to it. Very respected people in the ag industry think that the next 12-18 months will be critical in the world supply for grains. The next issue to pay close attention to is what inflation continues to do here in the U.S. Index funds continue to move towards increasing their open interest in commodities. As we see inflation increasing, we are seeing the index funds rebalance their portfolio and use commodities as a hedge against inflation. The index funds invest for the long term not for short term gains. These are a couple of things to continue to pay attention longer term. If you have questions and would like to discuss these issues further feel free to call me at any time. Have a great weekend.