Market Commentary > Weekly Crop Commentary - 5/13/2022

Weekly Crop Commentary - 5/13/2022

May 13, 2022

Ed Nienaber
Vice President, Grain Division
The grain markets this week continue to trade range bound, other than wheat currently up some seventy cents on the week. We have corn trading unchanged and beans up fifteen cents, post USDA crop report. The wheat story will continue for some time to come as the market tries its best to determine production loss in Ukraine as well as reduced yields in hard red wheat states in the US. The USDA gave us a very optimistic 2022-23 supply/demand report with current yields of 177.0 on corn and 51.5 on beans for this coming year. We will make great strides this week to get caught up on planted acres across the Midwest. However, with only 22% of corn and 12% of bean crop planted we are 50% behind normal as of Mother’s Day. Grain prices will continue to be well supported as we move through the planting season. In Econ101 we were told “the cure for high prices, is high prices”, however we find ourselves today in a very demand-driven marketplace when it comes to most if not all commodities. Weekly crop ratings, weather forecast, and geopolitical issues will be the driving force in the grain markets moving forward. The USDA final planted acres and grain stocks report will be released at the end of June. With all the inflation talk in the marketplace, the world will be watching the US crop progress over the next 45 days, more so than ever before. Hopefully the weather holds up and we can continue to get crops planted in the coming weeks.

Wes Bahan
Director of Grain Purchasing
Good afternoon and happy Friday the 13th. The meteorologists sure were nice to us this week with warm temperatures and sunshine. We are seeing some progress being made, but some of the ground just isn’t drying very quickly. With another round of wet weather forecasted for the latter half of the weekend, we may be pushing it a day or so, but it’s the middle of May. We got our first look at the 2022/23 crop forecast. We have a projected corn yield of 177.0 bushels per acre, down 4 bushels per acre from last year’s crop. With this, they have estimated that ending stocks at 1.36 billion bushels. This is down 80 million bushels from this year’s expected carryout. The projected soybean yield came in at 51.5 bushels per acre, very comparable to the 51.4 that last year’s crop produced. This would make the crop 5% higher than last year due to the increased planted acreage. Ending stocks look to end up at 310 million bushels. Even though this is 75 million bushels above the current year, it is still somewhat tight. If we have another weather problem in Brazil this year that number will likely shrink. Wheat supplies are expected to shrink also, mainly due to crop abandonment in the southern plains. Texas, Oklahoma, and southwest Kansas are extremely dry so there will be acres not harvested in those areas. With supplies shrinking, ongoing world issues, and weather, the market should stay supported until we get deeper into the growing season. 

Lou Baughman
Grain Origination, Kenton (Region 1)

Yesterday everyone finally got to play in the dirt, and they are scurrying to get as much planted before the rain that is forecasted for the weekend. The Monday afternoon planting report will be interesting to see how much progress was made this week. The USDA came out with updated stock numbers showing old crop not changing much and new crop changing numbers to be slightly friendly. High volatility is going to stay through the summer and could be extreme in both directions in the upcoming months.      

Lisa Warne
Grain Origination, Mechanicsburg (Region 3)

Happy Friday! The grain office and scales sure have been quiet with all of you in the fields. For the second week in a row, wheat has had the most momentum with September futures gaining over a dollar this month. Old corn has struggled this week, but Dec corn futures hit a new high overnight before pre-weekend profit-taking took over. Soybeans are having a nice rally to close out the week after a flash sale of 4.8 million bushels to China was announced this morning.
 
We got our first look at the new crop supply and demand numbers yesterday from USDA. In an unusual move this early, they lowered estimated corn yield from trendline 181 to 177 BPA due to late planting. However, they also reduced feed demand by 275 million bushels and export demand by 100 million bushels, putting carryout mostly in line with expectations. Will demand truly decrease? Will we get 89.5 million acres of corn planted? On the soybean side, there were no major surprises. Old and new crop carryout numbers were about as expected. For wheat, both old crop and new U.S. carryout numbers were lower than the average trade estimates. World wheat carryout for new crop was significantly lower than the average estimate by 5 million metric tons. This bullish news helped spur the wheat market to close 65 cents higher Thursday.
 
We anticipate seeing a giant leap in planting progress on Monday afternoon’s weekly report for most states. However, there are still weather concerns for some areas, Dakotas and Minnesota particularly. Have a great weekend and please continue to be safe out there in the field and on the road.

Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)

The northern plains got hammered with strong storms and wind overnight with the remnants headed our way this weekend. They definitely welcomed the moisture, but could have done without the 100+ MPH winds. Next week, our area will be back to more normal temps for this time of year, with a chance of showers mid-week. I would imagine we’ll continue to see decent progress made next week. 
 
With that being said, I anticipate the markets may lean bearish if we see a large amount of this crop get planted over the next couple weeks. However, I’m still relatively bullish long term given how tight carryouts are and the continued concerns with inflation and monetary policy. The VIX index, which monitors volatility, has traded above 30 most of the week. Yesterday’s WASDE report led to a strong rally in wheat as 21/22 carryout came in 23 mil bu lower and 22/23 carryout 40 mil bu lower than anticipated, on top of decreased production estimates. Continued poor winter wheat conditions, lack of spring planted wheat, and the potential impacts from export issues in Russia, Ukraine, and India are keeping this market supported. As for corn and beans, 22/23 carryout numbers were on par with expectations and the only change to South American production was lower Argentine bean production by 1.5 mil. USDA also decided to go with 177 as a corn yield versus the 181 trendline bpa that was released in February. Weather and planting progress will continue to be market movers here in the short term. For those of you in the fields and on the roads, stay safe out there this weekend!


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