Market factors to watch

By Jon Scheve, Superior Feed Ingredients, LLC

The USDA only increased corn acres by 500,000 from the March survey. This is not real bearish news because the market has been pushing new crop corn values to levels encouraging a lot more corn acres be switched over from beans this spring. Evidently, wet weather in North Dakota and Ohio this spring prevented a lot more acres being switched to corn.

Weather

This week I drove through southern Minnesota on I-35 to Des Moines and west along I-80 to Lincoln. Iowa’s corn is at least one week behind normal, which should push pollination dates back until after July 20. This means even after the long 3-day weekend, the 2-week weather forecasts will not yet reach the critical growing time period.

Current longer-term forecasts suggest weather should be close to normal though. If this happens, the current 177 yield projected by the USDA could be achieved. However, even with normal demand, that might not be as bearish as the market has been trading the last 2 weeks.

Ukraine

The 800 million bushels of corn still trapped in Ukraine will continue to be a factor on world demand. Brazil, Argentina, and the U.S. are the only countries that have enough grain to help meet the global demand needs should Ukraine not be able to export grain by the Black Sea. If the U.S. would be called upon to replace just a third of the grain trapped in Ukraine, U.S. carryout would be extremely tight and higher prices would be necessary to ration demand.

Bottomline for corn

It seems the market has forgotten about the war in Ukraine and is instead focusing on a worldwide recession fear. However, while outside markets are going down, ultimately everyone must still eat. Long term fundamentals for corn show potential for higher values.

USDA Acreage Report for soybeans

USDA’s biggest surprise was planted bean acres dropping 2.7 million acres from the March survey projection. 

Supply and Demand

If the country grows trendline yields and average demand can be achieved, carryout could drop to its tightest level since 2014. 

Bottomline for beans

This report should put a floor under bean prices until Christmas. The fundamental upside potential for beans looks very positive. With 2.7 million fewer acres planted compared to March projections means any August weather issues could cause a price explosion.

Prevent plant acres

The USDA announced they will resurvey Minnesota, North Dakota, and South Dakota again in July to reconfirm the acres planted. These survey results will become available in the Aug. 12 report.

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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