It’s cold here, but what is the weather in South America?

The first major story line for 2018 has to be the ongoing frigid temperatures across Ohio and the Midwest so far this winter. Those cold temperatures seem to affect human temperament as well as that of farm equipment, which makes for challenges in getting grain moved to final destinations. Not only do the trucks need to be operating at peak performance in these frigid temperatures, the driver has to be constantly aware of road conditions. Road conditions and temperatures could easily see some facilities needing grain moved today, not tomorrow in order to meet train shipping deadlines. Prolonged weeks of these conditions could cause ongoing headaches for those needing enough grain to keep facilities operating at optimum efficiency. The worst case scenario would see soybean crushing or corn ethanol facilities shutting down due to insufficient inventories on hand.

Weather, prices, and demand will be major factors for grain prices in the next three to six months. It is just a matter of how those factors will dictate the makeup of upcoming headlines. The Jan. 12 USDA report will finalize 2017 corn and soybean yields and production. Many expect U.S. corn yields to increase slightly from the previous yields estimate of 175.4 bushels per acre. It seems to be an assumed fact that 2017 marks the second year in a row of record corn yields, a very unusual feat. The ballooning corn yields seen the last five years are due almost exclusively to technology. Traders will be looking very hard at corn exports. U.S. corn exports will be critical in determining the track of corn prices over the next three months. USDA currently has the 2017-18 exports at 1.925 billion bushels. The reality of corn exports for the first quarter of the marketing year is that they continue to lag behind the pace of last year when they reached 2.293 billion bushels. The expectations by many since September have been that while exports are behind last year, they could move above earlier projections. This is due to the potential of increasing exports during March to August with lower exports from Brazil and Argentina.

Also adding to the woes for corn prices are ending stocks. The December 2017 USDA report had corn ending stocks at 2.437 billion bushels. That number is extremely close to the 2.5 billion bushel threshold that many consider to be very burdensome. If it is breached, corn could easily lose what little momentum it had during December. Two factors could cause the breach to occur — higher yields and lower exports. Watch those two items very closely. It is no question the market will move should they change in coming weeks. March CBOT has huge resistance at $3.55 and $3.72.

Soybean ending stocks will also be critical for price direction into spring planting. Current estimates from December had ending stocks at 445 million bushels. Contrary to corn, soybean yields could decline slightly. Like corn, soybean exports are very suspect. They continue to lag behind last year’s sales pace. Currently, USDA has U.S. soybean exports at 2.225 billion bushels. A huge barometer for soybean ending stocks is 500 million bushels. While it would be a surprise for USDA to increase ending stocks 55 million bushels or more, bear in mind that USDA can provide a surprise when it is least expected. That’s why it’s called a surprise.

In Ohio and the Midwest, the minds of many producers are focused on weather, not in the United States but in South America. Mid-January in South America is the equivalent of mid-July here — a critical time for corn pollination, temperatures, and rainfall in determining corn yields. While we are only a few days into 2018, it is very critical time for prices ahead for corn and soybeans. Through December there were no prolonged weather issues in South America with extremely high temperatures. Making the headlines late last month were indications China was very concerned about the quality of U.S. soybean imports due to higher than desired levels of foreign matter. This headline will loom large into March.


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Ohio Ag Weather and Forecast April 9, 2021

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