Planting progress slow around the Corn Belt

By Jon Scheve, Superior Feed Ingredients, LLC

While temperatures were nearing normal last week on our farm in southeast Nebraska, a cold front has pushed in and put a stop to any planting progress. Usually, we start planting corn by April 11 and try to finish within 7 to 10 days. However, ground temperatures in our area remain below 45 degrees and forecasts show lows near 25 degrees on Tuesday. The weather outlook later in the week looks more favorable, so hopefully everyone can start planting soon. The entire Corn Belt along I-80 and I-70 seems to be in the same situation through April 23.

South America’s second corn crop

Brazil’s weather is looking dry, so there are growing concerns for their second crop’s yield potential, with some already speculating a possible 20% yield reduction. If this dryness continues, it will likely support corn prices. However, it’s still early and many in the trade assumed Argentina would have a 20% yield reduction due to La Niña, but late season rains have improved conditions there and losses may only be around 10% below normal according to some recent estimates.

Corn basis

Corn basis has increased throughout the U.S. this week. Farmers in the north are enjoying some very high basis levels this spring, with values like what central Iowa farmers normally see for this time of year. This is due to significant prevent plant acres last spring throughout North Dakota. Add that to some ethanol plants in other parts of the country increasing production and farmers getting ready to plant, and corn basis may have some upside potential going into summer.

Soybean outlook

Soybean futures are back to trading at the upper end of their recent range. Plus, basis values throughout the U.S. have rallied 10 to 20 cents in just a week. These levels have not been seen since the summer of 2014.

However, there are some concerns that could put downward pressure on bean prices moving forward. Soybean meal prices haven’t pushed back to the top end of their recent trading range. The extent of another round of African swine fever in Chinese hog herds is uncertain. Plus, recent announcements that additional wheat could be fed to hogs in China has the potential to impact both corn and beans. While wheat can be a substitute for corn, the reason that beans can be affected is because wheat has a higher protein level and that could in theory reduce soybean meal in rations.

Still, the USDA is indicating an extremely tight bean supply. Rationing is expected to continue for old crop and more bean acres for 2021 will be needed. This may mean better prices are still to come.

Looking forward

For over the last 10 years, the corn market has pulled back a little in mid-April as the planters hit the fields, while bean prices have usually increased slightly during that time to perhaps “buy acres.”  This pattern seems likely to happen again this year; however, once May and June come there will inevitably be a weather scare that will impact both markets again.

Please email jon@superiorfeed.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.

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