Weekly Crop Commentary - 5/26/2023
May 26, 2023
Vice President, Grain Division
Good afternoon. Welcome to the unofficial start of summer. The weekend we all look forward to after the winter months.
Grains this week did show some signs of life again. Corn and beans have rallied some 40 cents each this week, but wheat continues to struggle. News of a fairly substantial wheat purchase into an eastern US port from Europe seemed to keep wheat futures subdued. There were some rains in the Texas high plains, but much of Oklahoma and SW Kansas did not have any precipitation.
There were a few other factors that attributed to the rally. There is growing sentiment of a debt ceiling agreement reached before June 1, more tensions in the Black Sea as Russia threatens to not renew again, unless certain demands are made, and of course the weather.
Some 40% of the spring planted acreage is now expecting to see some sort of drought stress in the early part of June. Exports continue to be lack luster as beans in Brazil are much cheaper, and they are looking at a big safrinha corn crop to supply the world. Soybean crush margins in all of China are once again negative, and planting progress continues at a pace ahead of the 5 year average. The updated progress report will be released on Tuesday afternoon, and we should get confirmation of another really productive week.Have a great weekend and a Happy Memorial Day.
Director of Grain Purchasing
Another week of good weather has majority of growers wrapped up or close to it going into this weekend. Hay season is in full swing for many with first cutting underway.
With 10-14 day forecasts turning dryer and warmer, we’ve seen some strength across the board in the grain markets as we head into a 3 day weekend. Markets are continuing to monitor weather, crop progress, US debt ceiling talks, and Russia’s demands on the Black Sea Corridor agreement.Continue to work with your local merchandiser to put a plan in place for your grain marketing and be prepared to take advantage of opportunities when the arise. Hope you all have a fun and safe Memorial Day weekend!
Grain Merchandiser, Kenton (Region 1)
Grain Merchandiser, Upper Sandusky (Region 2)
Grain Operation Manager, Urbana (Region 3)
We are now at the end of May. Graduation season is here and my summer motorcycle riding season is getting going. We will have to see what the USDA tells us about planting progress next Tuesday but with the weather the last couple of weeks I am sure we are seeing planting across the country getting wrapped up. There are several fields on my drive to work that I can row the corn and soybeans. It looks like it was taking about 8 days for corn to emerge.
I have had more than one call this week asking what is going on with the markets? I could go into a lot of different reason why the markets have been so challenging, but my one word answer would be SUPPLY. The market today believes that we have adequate supply or will have adequate supply for the next 12 to 15 months. Brazil had a record soybean crop and looks to have a record corn crop. The United States has good supply today and the 2023 crop is getting in the ground in good time. The long range weather forecast is not scaring anyone so the funds are doing what they do and shorting the market because they believe that commodity prices are going lower. We have seen a bit of recovery in the corn market this week as some of the shorts in the market are taking some profits and getting out ahead of the three day weekend.
So what do we do from here? As I have written for the last month any rally on old crop needs to be sold, we are back over 6.00 corn as I write this. We spent most of the winter around 6.50 corn and 15.00 soybeans. I do not believe we will see those price levels again without a major weather or world event. New crop is going to tricky, as we have been selling 6.00 corn and 15.00 soybeans for the last couple of years. Several people in the market are comparing what is going on this year to 2013, I can see looking at what the markets are doing, how they can see that similarity. We saw new crop highs in January or February of that year and traded lower the rest of the year with harvest lows in the 3.90 range for corn and 12.75 for soybeans. If we see any kind of bump we should get some new crop on the books as the farmer across the country has sold very little new crop grain.As we reflect on Memorial Day weekend, let us not forgot our fellow Americans that gave the ultimate sacrifice for the country we live in today.
Grain Merchandiser, Marysville (Region 4)
Welcome to hay-making week!
I’ve seen and heard of countless hay fields baled this week. Many of you have finished corn planting and will wrap up soybeans in the coming days. With the majority in the ground and the first cutting of hay done, most of you are ready for some rain. I’m afraid to tell you that the Weather Channel’s forecast shows no rain for the next two weeks. The dry forecast across the corn belt is one reason we’re seeing a rally to end the week before the long holiday weekend. However, we all know how quickly forecasts can change and so with it, the rally.
With your crop growing, now is a good time to protect your bottom line and cover some costs. Will we see more weather rallies? Possibly, but what if we don’t? Five-dollar corn out of the field sure pencils out better than four.Wheat harvest is quickly approaching, and you’ll be running those combines in about five short weeks. Here at Marysville, we’re planning on using our new CompuWeigh system in mid-June. To help us prepare, if you have not yet given us information about the trucks, tractors, and pickups you’ll use to deliver wheat, it would be beneficial for us to have that information ahead of time. Give us a call with any questions.
Grain Merchandiser, Canfield (Region 5)
Planting progress has moved along at very good pace here in NE Ohio. Most folks are either done or will be wrapping things up by the first of next week. The grain markets have also let us know that the planting pace across the country has been very good as well.
The corn market fell off pretty hard and fast at the first part of May. Since then it feels like we may have overdone it some and we have moved back to where we were at the first of the month. Soybeans have not seen the same bounce back. The Brazilian bean crop is huge, and China has moved their buying to South America. The U.S. Gulf is very uncompetitive today to China. The only beans we're moving out of the Gulf are because China's concern that some beans may not get to them in time from South America.
There has been some concern about the dryness that we are seeing right now across the belt. A lot of the Midwest has seen below-normal rainfall over the past 30 days, raising concerns. Where does the weather go as we move forward?
Below are a few graphics. The one on left shows what Eric Snodgrass, the lead forecaster for BAMWX, thinks will happen in week one in June. The middle shows what he thinks week two in June will look like and on the right, the weather trends for years when we transition rapidly from La Nina to El Nino, as we've done this year.In fact, forecasters can only find two other years - 1997 & 2009 - that saw similar speed in the transition by summer. This will be something to keep your eye on as we move into the first part of June.
Lastly, may we never forget the price that has been paid for what we have here in the United States. May God continue to bless those who protect us and this country. Happy Memorial Day to all of you.
Grain Merchandising Intern
The weather looks fantastic this Memorial Day weekend so I hope everyone can go outside and enjoy some time with their families!
After a week of sunshine, planting is wrapped up in the Champaign county area. The concern has now shifted to the forecast. While the soil around here is still saturated with subsurface moisture, the threat of no rain until the middle of June is enough to worry most. Though, experts are very confident that this will not be an extended drought and is just an abnormality.
December corn prices have rallied back up this Friday into the $5.30 range. These price increases are surprising (but welcome) given the start of the corn harvest in Brazil seems to be going very smoothly, although it will be several weeks before noticeable quantities start to reach the ports. With China's economy seemingly getting worse day by day they will continue to look for the cheapest option for their imports, which at this time happens to be Brazilian crops. The extended forecast does pose a threat which may influence some buyers, but any rain in the forecast could cause some of the gains to be eliminated.Hope everyone has a great weekend!