The USDA Supply and Demand Report later this month could see ending stocks for corn and wheat moving lower. That same report could see ending stocks for soybeans moving higher. The common thread for the changes in corn, soybeans, and wheat is U.S. exports.
U.S. corn exports could be seeing a boost due to the declining corn production in Argentina. Last month USDA estimated Argentina’s corn production at 42 million tons. Weather concerns in Argentina during January suggest its corn production could slip to 37 million tons. Increasing soybean production from Brazil could spell trouble for U.S. soybean exports beginning next month and into the balance of the marketing year, which ends in August. That export reduction could push U.S. soybean ending stocks higher than the current 470 million bushels.
Don’t look now, but could corn finally begin to see some bright news for prices, changing the funk producers have been in for months? March CBOT corn has been range bound since August between $3.45 and $3.70. Producers are sitting on a huge mountain of unsold corn in farm storage bins. While always optimistic, they realize $4 corn could be a possibility a whole lot sooner than $4.50 corn.
Informa two weeks ago lowered world corn production to 1,028 million tons. This compares to the USDA estimate of 1,044 million tons last month. Last year the world corn production was 1,076 million tons. Dry weather concerns are a big deal for Brazil’s corn production as well. Much of their corn production has been shifted away from the more desirable early planting period. Should Brazil’s production falter like what is already taking place in Argentina, the U.S. could be the world’s primary exporter for two or three months longer than earlier expected.
Weather concerns are also manifesting in the U.S. Plains with dry weather potentially affecting wheat production there. It appears La Niña is becoming entrenched sooner than expected in the U.S. Its affect could also be deeper than seen in the past.
Well-documented history follows that if the U.S. Plains are too dry, it spells potential upcoming weather issues for this year’s corn and soybeans growing season. We could see well-defined horizontal bands east to west on both extremes of too little moisture as well as too much rainfall in the Midwest. At risk this year are the continuation of corn and soybean yields which have experienced above trend line yields for four consecutive years. Will that trend continue into 2018 for both corn and soybeans? That trend could be problematic as the changing sun spot cycle indicates we could easily see more weather issues in the next four years than those seen in the previous four years.
Dicamba and its use are being heavily discussed this winter. Documented effects in numerous locations around the country last year have demanded that discussion. The Internet and social media provide the ability to document good and bad application of all products used for grain production to be known within hours and days compared to weeks in previous decades. Chemical application specialists will be further refining its use with very specific instructions for this growing season.
There are very real benefits for producers determined to eliminate specific weed pressure concerns. Chemical companies have spent millions to see dicamba become a reality. It is not going away, it will be available for sale. It will require application with both temperature and wind conditions known well in advance to maximize its benefits for producers.
It is no surprise that with the stagnant corn and soybean prices seen for several years that U.S. net farm income has dropped drastically from the $122 billion level of 2012 down to $63 billion in 2017. Expect to see long and heavily debated discussions on the farm bill this year. With those discussions crop insurance could easily come under attack multiple times.