Crops Analysis | April 29, 2022

( )

Corn

Price action: July corn futures ended unchanged at $8.13 1/2, after reaching a contract high at $8.24 1/2. The most-active contract rose 24 1/2 cents for the week. December corn fell 1/2 cent to $7.51 1/4, after posting a contract high at $7.57.

5-day outlook: Corn futures ended mixed as late profit-taking erased early gains, though May futures still posted the highest close for a nearby contract since August 2012. Midwest weather and exports will be closely watched next week, as slow U.S. corn planting becomes increasingly concerning. USDA’s weekly planting progress update after Monday’s close likely will show farmers remain behind schedule. As of April 24, the corn crop was 7% planted, well under the 15% five-year average pace and the slowest for that date since 2013.

30-day outlook: Forecasts for the first half of May suggest farmers will continue to struggle to get corn planted. The southwestern to eastern Corn Belt is expected to receive four rounds of rain through May 8, with most areas not likely to dry down enough to allow for fieldwork between rounds of rain, World Weather Inc. said today. “An important period of drier weather will occur May 9-13 with drier weather needed in the third week of the month to allow for planting to become aggressive,” the forecaster said. In addition to slow U.S. planting, concerns are building over dryness hurting production prospects for Brazil’s second corn crop. Mato Grosso do Sul and neighboring areas continued to dry down during the past week due to a lack of rain and warm weather.

90-day outlook: As corn planting is pushed back, the odds of below-trendline yields increases. If planting delays continue past mid-May, some farmers may opt to shift acres to soybeans from corn, which could further boost December futures. Other longer-term factors include exports, which were strong much of April. China stepped up purchases of U.S. corn over the past month, buying a total of nearly 4.54 MMT, based on USDA daily sales announcements (China had no daily sales reported during March). Corn export commitments still lag last year’s levels by 15%, and market will require sustained demand to remain at elevated prices.

What to do: Get current with advised 2021- and 2022-crop sales.

Hedgers: You should be 90% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.

Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.

 

Soybeans

Price action: July soybeans ended unchanged at $16.84 3/4, down 3 1/4 cents for the week. July soymeal rose $2.20 to $432.30 per ton. July soyoil plunged 242 points to 84.18 cents per pound, after posting a contract high at 87.65 cents earlier.

5-day outlook: Soybean futures faded from an initial climb to one-week highs as profit-taking sent prices to a mixed close. Unwinding of recent long soyoil/short meal spreads weighed on soyoil. Weather and export demand, along with Malaysian palm oil, will be key price influencers next week. USDA after Monday’s close is expected to report March U.S. soybean crush at 192.8 million bushels, based on a Reuters survey of analysts. The estimate indicates an average daily crush rate of 6.219 million bu., down from 6.229 million bu. during February. Still, March crush is expected to top the 188.2 million bu. crushed during same month in 2021.

30-day outlook: Midwest weather will be an important price driver during May as the soybean market enters a seasonally weak period. U.S. corn planting was running at a nine-year low in late April, and further delays may prompt some farmers to switch to soybeans, which could pressure new-crop November futures. Soybean planting is also behind schedule. USDA reported the U.S. soybean crop was 3% planted as of April 24, up from 1% a week earlier but down from the 5% five-year average for the date. Vegetable oil markets may also influence soy complex prices. Indonesia should be able to address its cooking oil shortage in the next few weeks and lift an export ban on palm oil and its refined products in May, industry officials said.

90-day outlook: Market focus will eventually shift to spring and summer Midwest weather. Strong export demand will be needed for nearby soybean futures to sustain elevated levels. China continued to buy old-crop U.S. soybeans in recent weeks, with smaller South American crops keeping the export window open longer than normal. U.S. soybean export commitments are running 6% behind year-ago, slightly stronger USDA’s projection for a decline of 6.5%.

What to do: Get current with advised 2021- and 2022-crop sales.

Hedgers: You should be 95% sold in the cash market on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.

Cash-only marketers: You should be 85% sold on 2021-crop. You should also have 40% of expected 2022-crop production forward-sold for harvest delivery.

 

Wheat

Price action: July SRW wheat fell 30 cents to $10.55 3/4, a three-week closing low and down 21 3/4 cents for the week. July HRW wheat fell 35 1/2 cents to $11.05 3/4, down 48 1/2 cents for the week and near a three-week low. July spring wheat tumbled 25 1/2 cents to $11.66, 3 1/4 cents for the week.

5-day outlook: Bearish daily and weekly low closes today sets the market up for further pressure early next week. Sagging export demand and strength in the U.S. dollar, which hit a 20-year high against a basket of currencies, may also weigh on futures. U.S. wheat export commitments are running 24% behind a year-ago. Parched HRW areas of the U.S. Plains may gain moisture relief. World Weather Inc. sees U.S. HRW wheat areas heading for a “wetter-biased period.”

30-day outlook: Spring wheat futures hit contract highs this week on concern over delayed planting in the Northern Plains. Spring wheat may take upside leadership over coming weeks, which combined with concern over Ukraine disruptions, could help winter wheat contracts stay elevated. Corn and soybean futures hold more bullish postures, which also may support wheat. From a speculator’s perspective, any further gains in corn futures will make wheat look like a bargain opportunity.

90-day outlook: The Russia/Ukraine war, now in its third month, and related disruptions to global grain supplies promise to keep markets on edge. With no end to the conflict in sight, sellers in the wheat futures market will remain hesitant in coming months.

What to do: Get current with advised 2021- and 2022-crop sales.

Hedgers: You should be 90% sold on 2021-crop in the cash market. You have 10% of 2021-crop hedged in July SRW futures at $8.75 1/4. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.

Cash-only marketers: You should be 90% sold on 2021-crop. You should also have 50% of expected 2022-crop forward-sold for harvest delivery.

 

Cotton

Price action: July cotton fell 205 points to 145.63 cents per pound, up 978 points for the week.

5-day outlook: Cotton traders are tracking shifts in crude oil, as indicated by the mid-week surge to fresh highs, despite the U.S. dollar index hitting a two-decade high. Cotton and crude slipped today, and further weakness in U.S. equities may burden cotton prices next week. Cotton traders will focus on Monday’s weekly USDA Crop Progress report and the next weekly USDA Export Sales report.

30-day outlook: Traders will continue watching planting and growing conditions in the Southwest, especially if the severe lack of moisture prevalent through the first four months of the year persists. USDA usually refrains from posting cotton crop condition ratings until late May or early June. The industry will continue watching export sales numbers to see how international demand responds to high prices. Inflation and sustained crude and gold strength could generate buying interest in cotton, but recent equity market weakness and recession fears could more than offset bullish ideas.

90-day outlook: The cotton industry’s focus will shift toward the new crop outlook by early summer, especially with the 2021-22 crop year ending on July 31. Southwestern dryness certainly suggests limited potential for the fall U.S. cotton harvest, so that will likely become a major point of interest for traders, producers and processors as summer gets underway. However, geopolitical events, the global economic outlook and the value of the U.S. dollar could exert outsized influence over the market this spring and summer. Crude oil and gold trends could also serve as commodity sector indicators, particularly for cotton market participants.

What to do: Get current with advised 2021- and 2022-crop sales.

Hedgers: You are 100% priced in the cash market on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.

Cash-only marketers: You should be 90% priced on 2021-crop. You should also be 50% forward-priced for harvest delivery on expected 2022-crop production.

 

Latest News

First Thing Today | March 28, 2024
First Thing Today | March 28, 2024

Corn, soybeans and wheat traded in narrow ranges during the overnight session ahead of USDA’s reports later this morning.

After the Bell | March 27, 2024
After the Bell | March 27, 2024

After the Bell | March 27, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

Market Watch | March 27, 2024
Market Watch | March 27, 2024

Cash cattle prices soar to all-time high.

Baltimore Bridge Collapse: Limited Impact on Trade Basis Channel Reopening Timeline
Baltimore Bridge Collapse: Limited Impact on Trade Basis Channel Reopening Timeline

RFK Jr. VP | Dairy cattle bird flu update | John Deere layoffs | Dollar/yen exchange rate 34-year high

Ahead of the Open | March 27, 2024
Ahead of the Open | March 27, 2024

Corn and soybeans each favored the downside overnight, with corn leading the way lower. Wheat showed relative strength and went into the break near unchanged.