Watching the weather

By Doug Tenney, Leist Mercantile

“Eenie meenie miney mo, who shall stay and who should go? How are we supposed to know? Eenie meeine miney mo” was Cindy’s response to one more political mailing for a mud-slinging local race. The same question could be asked by U.S. producers in relation to corn acres, “Which way do we go?” Corn prices are down more than soybean prices compared to last February.

The USDA Outlook Forum on February 15 and Feb. 16 estimated U.S. 2024 corn acres would be 91.0 million acres, down from last year at 94.6 million acres. Meanwhile, U.S. 2024 soybeans were estimated to reach 87.5 million acres compared to last year at 83.6 million acres. While some minor changes could take place for corn and soybean acres this year, don’t expect multiple millions of acres changes in 2024. Why? U.S. producers are creatures of habits, one being crop rotation is an annual event. Mass wholesale change is not one of those habits.

Weather continues to be a non-factor at the beginning of March with the lack of extremes in the U.S., Europe, and South America. There is zero weather premium currently for grain prices. South America drought and excess moisture issues at Christmas have drastically improved. The months long drought in central and northern Brazil was met with timely rains in January and February. Brazil’s soybean harvest has reached 50% completion and the planting of second crop corn is well underway. USDA Supply and Demand reports for March 8 and April 11 will be anticipated for Brazil soybean production declines, as some analysts last month were projecting that number at 142 to 150 million tons. In February, USDA estimated that Brazil’s soybean production was 156 million tons while their corn production was estimated at 125 million tons.

China was an active buyer of soybeans and corn the last week of February, buying soybeans from Brazil while buying corn from Ukraine on two different days. It does seem puzzling that China was buying corn to add to their reserve stocks even though it had record corn production last year. Sino Grain, a state run company was the corn buyer. Remember that state run companies in China seem to have more freedom in their grain purchases in situations which at times do not make much sense. Unfortunately, in that same period China was a buyer of very little U.S. corn.

Crop insurance revenue protection (RP) prices for 2024 were announced the first days of March at $4.66 and $11.55. Volatility was higher than expected in spite of lower prices compared to last year’s corn at $5.91 and soybeans for last year at $13.76. Crop insurance per acre premiums for revenue protection were estimated to see a decline of 15% to 20%. Corn prices were down 21% while soybean prices were down 16% compared to last year. It was surprising to see price volatility in 2024 higher for both corn and soybeans compared to 2023 in spite of lower commodity prices. The uptick in price volatility most likely was a result of both corn and soybeans posting more down days than up days in February for their respective daily closing prices at the CBOT. Both corn and soybeans had their highest daily average for the month of February at the beginning of the month. The lowest daily average for the month of February took place the last day of the month. In addition, both had multiple strings of consecutive days with lower prices compared to the previous day.

Late February, Brazil was expecting to transition out of their monsoon season by mid-March. I was surprised to see the term, “monsoon season” associated with the country of Brazil as my memory held that phrase exclusively to India and Pakistan. If those Brazil rains end prematurely, their second crop corn production could be destined for lower production compared to previous projections.  

Keep an eye on U.S. weather the next four weeks. If rains across the U.S. Corn Belt are below normal, it could be the start of intense weather concerns for the 2024 growing season for corn and soybeans. The shift from El Niño to a La Niña weather pattern could cause the western Corn Belt to be drier than normal. Other weather forecasts indicate 2024 summer temperatures as warmer than normal. Should both of these forecasts take place it will spell trouble for the USDA Outlook Forum 2024 corn yield projected at 181 bushels per acre, eclipsing the record yield in 2023 at 177.3 bushels per acre.

Thought for the day, “When you don’t know what you’re talking about, it’s hard to know when you’re finished.” – Tom Smothers.

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One comment

  1. U.S. producers traditionally engage in annual crop rotation. This habitual practice limits large-scale changes in planting decisions.

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