Weekly Crop Commentary - 4/29/2022
Apr 29, 2022
Ed Nienaber
Vice President, Grain Division
The grain markets have seen another active week as we close out the month of April. We find corn prices leading the way this week trading some thirty cents higher. While soybeans and wheat struggle to stay unchanged as the day-to-day market roller coaster continues. The futures markets are being well supported by the geo-political unrest in not only western Europe, but also the continued lockdown in China due to a Covid resurgence. However, as we move into the month of May the weather risk premium in our markets seems to be in the forefront of most trade discussions. We should see some improvement on Monday’s USDA update in crop planting for parts of the Midwest and Carolinas. The weather forecast over the next ten days looks to be cooler and wetter for much of the eastern corn belt. We will be playing catch-up as we move through the month of May and looking for every window of opportunity to get crops in the ground. The lingering effects of the La Nina weather event is getting the blame for the drier and hotter spring we are experiencing in the Southwestern states. Continued concerns that this may find its way into the western corn belt in the coming months is supporting new crop futures. The next government crop report will be released on Thursday, May 12 and we will be looking for some adjustments to this year’s carry-over stocks. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. The final Friday in April and man, this month went fast. During my travels over the last couple of evenings, I have seen a lot of field work being done. Fertilizer application, spraying, tillage - all kinds of field prep happening. I have seen a few planters rolling and they seem to be on soybeans as the cold, damp forecast is keeping them from planting corn. Anyway, it sure seems that when the next window appears it will be busted wide open. Now on to the markets: We had another large corn sale announced for China with the bulk of it being new crop, which makes sense. The additional old crop sales don’t seem to make sense as New Orleans is home to the most expensive corn in the world right now. So, are the other origins that short of supply, and if so, why are they so much cheaper? Ocean freight from Argentina and New Orleans to China is close in price, so it’s not a freight play making it happen. If freight can work its way a bit lower, it would make sense to import corn into the southeast feed market. It is working its way to import parity. If that happens, I can’t see how that would be positive for US corn. Time will tell, but it’s a distinct possibility. Cash basis is ever so slowly working its way lower, but the corn futures market is making new highs once again. Not running out of corn, but apparently, we are short of pieces of paper that say corn on them in Chicago. The next couple of weeks will be watched closely and any weather changes will have major impacts on prices. Hopefully next week we can report that were halfway planted with corn and have a good start on beans. Have a great weekend.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon! It’s been three weeks since I’ve written with Good Friday and a vacation to Pennsylvania Dutch Country in between. In that time, corn has continued its steady climb and soybeans also have stair-stepped their way up. Wheat has traded higher in these past three weeks but has seen a tight range. The highest-volume corn futures month (July) is now less than 25 cents away from corn’s all-time high of $8.4375 set in August 2012. July soybean futures are a dollar away from soybeans’ all-time high of $17.9475 set in September 2012.
Monday’s Crop Progress report confirmed what we all know – spring planting is off to a slow start. U.S. Corn was at 7% planted compared to a five-year average of 15%, U.S. soybeans at 3% compared to the five-year average of 5%. Winter wheat condition for the country declined another three points to only 27% Good/Excellent (51% five-year average). Ohio wheat improved four to 66% G/E, which is well below last year, but in line with the average.
In addition to the burdens of war and global supply, weather will continue to be a large factor in the markets. Until we see widespread planters rolling through the Corn Belt, the market will show concern. Locally, we’ve seen some planting, particularly in the Urbana area. Others in the quad-corners of Champaign/Clark/Madison/Union counties are hoping this weekend’s rain forecast holds off just a little longer as the temperatures are finally looking to warm up. Have a great weekend. Be safe out there in the fields and on the road.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
By no means have we seen an ideal window for planting yet, but we have been seeing some fieldwork taking place this week between side dressing wheat, knifing in anhydrous, and trickling in a few beans in hopes to make some progress before next week’s cool, wet weather pushes them out of the field again.
Uncertainty continues to push grain markets to new highs this week in many commodities as the market digests a slew of information. July corn futures are less than 30c away from the $8.49 2012 high and July beans are nearing $17 again. Dec corn is sitting steady around the $7.50 mark right now, as Nov beans have come back strong from a drop below $15 earlier in the week. Indonesia’s export ban on palm oil that went into effect yesterday has led that charge. We’ve seen new highs in bean oil, canola, and palm oil as a result. The US dollar is at 20-year highs, while the Chinese Yuan and Brazilian Real have been slipping lower. US inflation and how the Fed plans to combat it continues to be a topic of conversation. I don’t know about you, but I feel like the term “inflation” is the new “Covid” that doesn’t appear to be going away anytime soon. Chinese lockdowns due to the coronavirus are adding to the concerns of slowing economic growth and insurmountable logistic issues as well.
In conjunction with all of that, fighting in Russia and Ukraine appears to have intensified. May 9th is Victory Day in Russia and there has been speculation that Putin may take more desperate measures over the next week and a half to gain control of eastern Ukraine and port cities. Over the last week, Russian forces have bombed train stations, taken out bridges that allow grain rail cars to travel to ports, and caused damage to grain elevators in the region. However, Ukraine remains resilient and finds new ways to continue exporting and planting grain. As of this week, they have planted roughly 25% of their 70% expected area amid fuel shortages and debris from the war. Corn specifically appears to be close to 10% planted vs. 20% this time last year. I still have concerns regarding the country’s storage capacity and export capabilities, but Ukraine loaded their first panamax corn vessel this week out of a Romanian port. This is progress, but does not appear to be a sustainable solution as 30,000 rail cars sit at the Ukraine-Poland border waiting to cross.
Reminder that new price limits start on Monday with corn increasing from 35 to 50c (expanded 55 to 75c), soybeans from 90c to $1.15 (expanded $1.35 to $1.75), and Chicago Wheat lowering from 85 to 70c (expanded $1.30 to $1.05). The CME adjusts price limits twice a year based on average trading ranges during those 6-month periods.
Hold onto your hats over the next couple weeks as we watch US planting progress, the May 12th WASDE, South American weather, and Russia/Ukraine. I encourage you to continue evaluating and adapting your marketing plans, along with the amount of risk that you’re willing to take on. Consider small incremental sales on 21, 22, and 23 crops. As you get busy in the fields, don’t forget to take advantage of having target offers in. If you have any questions, don’t hesitate to reach out! Wishing you all a safe and successful planting season!
Vice President, Grain Division
The grain markets have seen another active week as we close out the month of April. We find corn prices leading the way this week trading some thirty cents higher. While soybeans and wheat struggle to stay unchanged as the day-to-day market roller coaster continues. The futures markets are being well supported by the geo-political unrest in not only western Europe, but also the continued lockdown in China due to a Covid resurgence. However, as we move into the month of May the weather risk premium in our markets seems to be in the forefront of most trade discussions. We should see some improvement on Monday’s USDA update in crop planting for parts of the Midwest and Carolinas. The weather forecast over the next ten days looks to be cooler and wetter for much of the eastern corn belt. We will be playing catch-up as we move through the month of May and looking for every window of opportunity to get crops in the ground. The lingering effects of the La Nina weather event is getting the blame for the drier and hotter spring we are experiencing in the Southwestern states. Continued concerns that this may find its way into the western corn belt in the coming months is supporting new crop futures. The next government crop report will be released on Thursday, May 12 and we will be looking for some adjustments to this year’s carry-over stocks. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. The final Friday in April and man, this month went fast. During my travels over the last couple of evenings, I have seen a lot of field work being done. Fertilizer application, spraying, tillage - all kinds of field prep happening. I have seen a few planters rolling and they seem to be on soybeans as the cold, damp forecast is keeping them from planting corn. Anyway, it sure seems that when the next window appears it will be busted wide open. Now on to the markets: We had another large corn sale announced for China with the bulk of it being new crop, which makes sense. The additional old crop sales don’t seem to make sense as New Orleans is home to the most expensive corn in the world right now. So, are the other origins that short of supply, and if so, why are they so much cheaper? Ocean freight from Argentina and New Orleans to China is close in price, so it’s not a freight play making it happen. If freight can work its way a bit lower, it would make sense to import corn into the southeast feed market. It is working its way to import parity. If that happens, I can’t see how that would be positive for US corn. Time will tell, but it’s a distinct possibility. Cash basis is ever so slowly working its way lower, but the corn futures market is making new highs once again. Not running out of corn, but apparently, we are short of pieces of paper that say corn on them in Chicago. The next couple of weeks will be watched closely and any weather changes will have major impacts on prices. Hopefully next week we can report that were halfway planted with corn and have a good start on beans. Have a great weekend.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon! It’s been three weeks since I’ve written with Good Friday and a vacation to Pennsylvania Dutch Country in between. In that time, corn has continued its steady climb and soybeans also have stair-stepped their way up. Wheat has traded higher in these past three weeks but has seen a tight range. The highest-volume corn futures month (July) is now less than 25 cents away from corn’s all-time high of $8.4375 set in August 2012. July soybean futures are a dollar away from soybeans’ all-time high of $17.9475 set in September 2012.
Monday’s Crop Progress report confirmed what we all know – spring planting is off to a slow start. U.S. Corn was at 7% planted compared to a five-year average of 15%, U.S. soybeans at 3% compared to the five-year average of 5%. Winter wheat condition for the country declined another three points to only 27% Good/Excellent (51% five-year average). Ohio wheat improved four to 66% G/E, which is well below last year, but in line with the average.
In addition to the burdens of war and global supply, weather will continue to be a large factor in the markets. Until we see widespread planters rolling through the Corn Belt, the market will show concern. Locally, we’ve seen some planting, particularly in the Urbana area. Others in the quad-corners of Champaign/Clark/Madison/Union counties are hoping this weekend’s rain forecast holds off just a little longer as the temperatures are finally looking to warm up. Have a great weekend. Be safe out there in the fields and on the road.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
By no means have we seen an ideal window for planting yet, but we have been seeing some fieldwork taking place this week between side dressing wheat, knifing in anhydrous, and trickling in a few beans in hopes to make some progress before next week’s cool, wet weather pushes them out of the field again.
Uncertainty continues to push grain markets to new highs this week in many commodities as the market digests a slew of information. July corn futures are less than 30c away from the $8.49 2012 high and July beans are nearing $17 again. Dec corn is sitting steady around the $7.50 mark right now, as Nov beans have come back strong from a drop below $15 earlier in the week. Indonesia’s export ban on palm oil that went into effect yesterday has led that charge. We’ve seen new highs in bean oil, canola, and palm oil as a result. The US dollar is at 20-year highs, while the Chinese Yuan and Brazilian Real have been slipping lower. US inflation and how the Fed plans to combat it continues to be a topic of conversation. I don’t know about you, but I feel like the term “inflation” is the new “Covid” that doesn’t appear to be going away anytime soon. Chinese lockdowns due to the coronavirus are adding to the concerns of slowing economic growth and insurmountable logistic issues as well.
In conjunction with all of that, fighting in Russia and Ukraine appears to have intensified. May 9th is Victory Day in Russia and there has been speculation that Putin may take more desperate measures over the next week and a half to gain control of eastern Ukraine and port cities. Over the last week, Russian forces have bombed train stations, taken out bridges that allow grain rail cars to travel to ports, and caused damage to grain elevators in the region. However, Ukraine remains resilient and finds new ways to continue exporting and planting grain. As of this week, they have planted roughly 25% of their 70% expected area amid fuel shortages and debris from the war. Corn specifically appears to be close to 10% planted vs. 20% this time last year. I still have concerns regarding the country’s storage capacity and export capabilities, but Ukraine loaded their first panamax corn vessel this week out of a Romanian port. This is progress, but does not appear to be a sustainable solution as 30,000 rail cars sit at the Ukraine-Poland border waiting to cross.
Reminder that new price limits start on Monday with corn increasing from 35 to 50c (expanded 55 to 75c), soybeans from 90c to $1.15 (expanded $1.35 to $1.75), and Chicago Wheat lowering from 85 to 70c (expanded $1.30 to $1.05). The CME adjusts price limits twice a year based on average trading ranges during those 6-month periods.
Hold onto your hats over the next couple weeks as we watch US planting progress, the May 12th WASDE, South American weather, and Russia/Ukraine. I encourage you to continue evaluating and adapting your marketing plans, along with the amount of risk that you’re willing to take on. Consider small incremental sales on 21, 22, and 23 crops. As you get busy in the fields, don’t forget to take advantage of having target offers in. If you have any questions, don’t hesitate to reach out! Wishing you all a safe and successful planting season!