Weekly Crop Commentary - 4/22/2022
Apr 22, 2022
Ed Nienaber
Vice President, Grain Division
The futures markets are finding little support today as we move into the weekend and the last week of April. We have seen a positive week for the most part as corn traded above $8.00, with beans exceeding $17.50. Trade announcements this morning about China buying corn and Indonesia banning palm oil exports supported prices early in the session. However, with the weekend approaching and the outlook that we will begin to see a window of opportunity to get planting underway, we have lost all we’ve gained this week in the corn market. Meanwhile, beans are still stronger on the week, up thirty cents. The trade continues to be concerned about the long-term effects of La Nina holding on into the summer growing season with the wetter than normal spring that we’ve seen and possible drier than normal summer in parts of the Midwest. This will continue to keep the funds engaged in commodity markets moving forward, looking for opportunities to own paper. Basis continues to struggle as increased freight cost, plentiful nearby inventories, and historic high cost of physical commodities are pressuring nearby demand. All this has the end-users and processors buying as needed and as margins will allow, as we move through the month of May and planting season gets underway. Cash grain prices are at historic levels and daily communication with the markets will be very important. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. It was another cool and wet week for us which means no fieldwork took place this week. Today is a nice day and a nice forecast for tomorrow may allow some spraying in certain spots over the weekend. It looks like another chance of rain for the first part of next week, but it’s going to be cold, and that will slow drying as the week goes on. The calendar says its late April, but Mother Nature says not so fast. Late-April cold isn’t uncommon though. On this day last year, we received 4+ inches of snow. It looks like the two-week forecast is calling for the Midwest and the Southern US to dry out, but temps look to remain on the below average side for us. The futures market started out the week on fire with little planting progress and spillover buying interest. As the week went along, we just couldn’t seem to keep the momentum and ended on a negative tone, which is the first time in quite a while. Our export sales report yesterday morning was below expectations and set the tone for the selloff, but we did have a massive sale of 1.375 MMT of corn to China announced this morning, and small sales of soybeans into Mexico. The corn sales have a few puzzled as Argentina corn prices are well below that of the US. Corn basis for the week continues to have a weaker tone. There is a lot of corn for sale, and for close to $8 dollars a bushel there should be a lot of corn for sale. If corn planters can get rolling in early May it will not look good for a basis rebound in the near term. I hope everyone had a great Easter last weekend and can get out to enjoy the weather this weekend.
Lou Baughman
Grain Origination, Kenton (Region 1)
Grain markets have taken a step back yesterday and today. The commodity markets are benefiting from tight supplies amplified by the Russian/Ukraine war. Now, we are adding weather and logistic problems to further escalate fear in the marketplace. Brazil’s dryness continues but is not expecting a major crop loss. The US is having trouble getting planting started because of lingering wet and cool temperatures but the Climate Prediction Center has forecasted a persistent drought in the Plains for most of the summer. This could change, but if it doesn’t, we maybe looking at a “perfect storm” for tighter supplies and higher food inflation issues.
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
It is already the last week of April, where has the month gone? We have seen little to no planting activity in Ohio so far. I have several customers who are getting itchy to get going, but Mother Nature is doing her best to make us sweat.
The corn and soybean markets have traded to new highs earlier in the week and saw a setback in corn on Thursday. I am asked somewhat frequently why the markets are doing what they are doing. When we are at these price levels there is no rhyme or reason to their movement. Trade volumes have not been very high, so any price movement gets overblown. We have seen a little grain selling, but it seems that the farmer is done selling until he gets the crop planted.
The weather forecast for the next 10 days to two weeks is dryer, but not very warm. I am sure that as soon as it is fit, the planters will start rolling, even if soil temperatures are not ideal. Remember to be careful this spring as an accident can happen in the blink of an eye.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon! Planting progress is no different here in NE Ohio than in any other area of the state. We continue to be wet and cool most days. It seems this weekend we are finally going to get a couple of days in a row with warmer temps and maybe two days without rain. Forecasters are calling for a slight chance of a little rain overnight but dry for Saturday and Sunday with rain again on Monday. Yesterday we saw the Climate Prediction Center update its three-month forecast for May, June, and July. It calls for the drought to expand across eastern Kansas, northwestern Missouri, most of Iowa, and southern Minnesota over the next 90 days. Normally, we would not be overly concerned with such a forecast this early, except global supplies of grain and oilseeds are particularly tight this year. If verified, today's outlook would raise yield risks for nearly half of the nation's corn production, along with sustaining risks for a major portion of its wheat production.
We also continue to pay attention to the story over in Ukraine. We are seeing some acres being planted but not the usual mix. Many acres are being planted to other crops besides corn that don’t take as much fertilizer and also can be cultivated to keep the weeds down. Fertilizer as well as seed and crop chemicals remain limited, and farmers also face the risk that their crops will be destroyed by the Russian troops. So there is a great deal of concern on that front as well. Also 90% of Ukraine’s exports normally move through the Black Sea and now there is nothing moving from there and we don’t know if that will change in the foreseeable future. I also found it interesting that one-third of those shipments went to Europe, while two-thirds went to the Middle East, North Africa, and to Southeast Asia. Many of those countries had a 60- to 90-day food supply prior to the war. There is some grain flowing out of Ukraine by rail through Poland but it’s just a fraction of what was moving through the ports. As I have said in past comments, all of this has amplified the need for the U.S. to have a good growing season going forward. Any hiccups during the planting and growing season will keep the market on edge. Enjoy the warmth and sun over the weekend!
Vice President, Grain Division
The futures markets are finding little support today as we move into the weekend and the last week of April. We have seen a positive week for the most part as corn traded above $8.00, with beans exceeding $17.50. Trade announcements this morning about China buying corn and Indonesia banning palm oil exports supported prices early in the session. However, with the weekend approaching and the outlook that we will begin to see a window of opportunity to get planting underway, we have lost all we’ve gained this week in the corn market. Meanwhile, beans are still stronger on the week, up thirty cents. The trade continues to be concerned about the long-term effects of La Nina holding on into the summer growing season with the wetter than normal spring that we’ve seen and possible drier than normal summer in parts of the Midwest. This will continue to keep the funds engaged in commodity markets moving forward, looking for opportunities to own paper. Basis continues to struggle as increased freight cost, plentiful nearby inventories, and historic high cost of physical commodities are pressuring nearby demand. All this has the end-users and processors buying as needed and as margins will allow, as we move through the month of May and planting season gets underway. Cash grain prices are at historic levels and daily communication with the markets will be very important. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. It was another cool and wet week for us which means no fieldwork took place this week. Today is a nice day and a nice forecast for tomorrow may allow some spraying in certain spots over the weekend. It looks like another chance of rain for the first part of next week, but it’s going to be cold, and that will slow drying as the week goes on. The calendar says its late April, but Mother Nature says not so fast. Late-April cold isn’t uncommon though. On this day last year, we received 4+ inches of snow. It looks like the two-week forecast is calling for the Midwest and the Southern US to dry out, but temps look to remain on the below average side for us. The futures market started out the week on fire with little planting progress and spillover buying interest. As the week went along, we just couldn’t seem to keep the momentum and ended on a negative tone, which is the first time in quite a while. Our export sales report yesterday morning was below expectations and set the tone for the selloff, but we did have a massive sale of 1.375 MMT of corn to China announced this morning, and small sales of soybeans into Mexico. The corn sales have a few puzzled as Argentina corn prices are well below that of the US. Corn basis for the week continues to have a weaker tone. There is a lot of corn for sale, and for close to $8 dollars a bushel there should be a lot of corn for sale. If corn planters can get rolling in early May it will not look good for a basis rebound in the near term. I hope everyone had a great Easter last weekend and can get out to enjoy the weather this weekend.
Lou Baughman
Grain Origination, Kenton (Region 1)
Grain markets have taken a step back yesterday and today. The commodity markets are benefiting from tight supplies amplified by the Russian/Ukraine war. Now, we are adding weather and logistic problems to further escalate fear in the marketplace. Brazil’s dryness continues but is not expecting a major crop loss. The US is having trouble getting planting started because of lingering wet and cool temperatures but the Climate Prediction Center has forecasted a persistent drought in the Plains for most of the summer. This could change, but if it doesn’t, we maybe looking at a “perfect storm” for tighter supplies and higher food inflation issues.
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
It is already the last week of April, where has the month gone? We have seen little to no planting activity in Ohio so far. I have several customers who are getting itchy to get going, but Mother Nature is doing her best to make us sweat.
The corn and soybean markets have traded to new highs earlier in the week and saw a setback in corn on Thursday. I am asked somewhat frequently why the markets are doing what they are doing. When we are at these price levels there is no rhyme or reason to their movement. Trade volumes have not been very high, so any price movement gets overblown. We have seen a little grain selling, but it seems that the farmer is done selling until he gets the crop planted.
The weather forecast for the next 10 days to two weeks is dryer, but not very warm. I am sure that as soon as it is fit, the planters will start rolling, even if soil temperatures are not ideal. Remember to be careful this spring as an accident can happen in the blink of an eye.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon! Planting progress is no different here in NE Ohio than in any other area of the state. We continue to be wet and cool most days. It seems this weekend we are finally going to get a couple of days in a row with warmer temps and maybe two days without rain. Forecasters are calling for a slight chance of a little rain overnight but dry for Saturday and Sunday with rain again on Monday. Yesterday we saw the Climate Prediction Center update its three-month forecast for May, June, and July. It calls for the drought to expand across eastern Kansas, northwestern Missouri, most of Iowa, and southern Minnesota over the next 90 days. Normally, we would not be overly concerned with such a forecast this early, except global supplies of grain and oilseeds are particularly tight this year. If verified, today's outlook would raise yield risks for nearly half of the nation's corn production, along with sustaining risks for a major portion of its wheat production.
We also continue to pay attention to the story over in Ukraine. We are seeing some acres being planted but not the usual mix. Many acres are being planted to other crops besides corn that don’t take as much fertilizer and also can be cultivated to keep the weeds down. Fertilizer as well as seed and crop chemicals remain limited, and farmers also face the risk that their crops will be destroyed by the Russian troops. So there is a great deal of concern on that front as well. Also 90% of Ukraine’s exports normally move through the Black Sea and now there is nothing moving from there and we don’t know if that will change in the foreseeable future. I also found it interesting that one-third of those shipments went to Europe, while two-thirds went to the Middle East, North Africa, and to Southeast Asia. Many of those countries had a 60- to 90-day food supply prior to the war. There is some grain flowing out of Ukraine by rail through Poland but it’s just a fraction of what was moving through the ports. As I have said in past comments, all of this has amplified the need for the U.S. to have a good growing season going forward. Any hiccups during the planting and growing season will keep the market on edge. Enjoy the warmth and sun over the weekend!