Market Analysis

Waiting on markets and weather

By Doug Tenney, Leist Mercantile

While cycling sold recently in North Carolina in what I deemed to be familiar territory, I (oops) “left the planned route.” Realizing my phone showed 10% battery life and that I was lost was not my most shining moment. My new navigation means became a conversation with a DoorDash driver, a local fire department, and a nice lady working in her yard. Fortunately, I was just 5 miles short of my destination. Since I had alerted Cindy of my dilemma, she once again got to “wonder” as I “wandered.” No need to worry, just wait. The same advice followed by producers, prepared and anxious to plant.

Puzzling and perplexing accurately describes the situation of soybean trading activity on Friday, April 12. Literally out of nowhere, soybeans mid-morning were up 20 cents, and closing up 14 cents. Numerous research reports literally had no explanation of what was taking place and were unable to put forth fundamental reasons for the rally.… Continue reading

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Neutral numbers for corn, bearish for soybeans and wheat

By Bennett Musselman, Leist Mercantile

Trade expectations: U.S. soybean exports reduced, increased ethanol demand and Brazil soybean and corn production to be reduced.    

Following the noon USDA report release, corn was down 2 cents, soybeans down 12 cents, and wheat down 9 cents. Moments before the report was released, corn was down 1 ½ cents, soybeans down 8 cents, and wheat down 6 cents. 

U.S. 2023-2024 ending stocks: corn 2.122 billion bushels, last month 2.172 billion bushels; soybeans 340 million bushels, last month 315 million bushels; and wheat 698 million bushels, last month 673 million bushels. 

Trader estimates for 2023-2024 US ending stocks: corn 2.102 billion bushels; soybeans 317 million bushels; and wheat 690 million bushels. 

Surprisingly there were no changes Brazilian soybean production. The trade was anticipating a slight reduction in the Brazilian soybean crop. USDA this month estimates Brazil soybean production at 155 million tons, last month was 155 million tons.… Continue reading

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Where are prices headed?

By Jon Scheve, Superior Feed Ingredients, LLC 

History repeated itself again this week. Just like the last 10 years, May corn futures finished lower than the close one week after the March planting intentions was released.

Where will prices go from here? 

In 2016, 2021, and 2022 the price of May corn rallied over the next 3 weeks. In 2021 and 2022, old crop corn carryout was very tight. However, in 2016 as is the case this year the stocks are not tight.

In 3 of the last 10 years, May corn’s value at the end of April was similar to or a few cents higher compared to the value of corn at the beginning of April. And in the other 4 of the last 10 years, corn finished the month lower than where it started. So, based on historical trends, there is a good chance May corn will not finish the month much higher and could end up even lower. … Continue reading

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Prospective Plantings and bridge collapse

By Doug Tenney, Leist Mercantile

Recently, I was doing some cleaning with a small stiff brush. Watching me, Cindy suggested a toothbrush might do a more thorough job unless I wanted to keep blundering along. Here’s to zero blunders in the weeks ahead as the planting of corn and soybeans take place now and into May. Be safe in those long days with no unforeseen brushes with trouble.

The March 28 USDA report of US Quarterly Grain Stocks, along with U.S. Prospective Plantings provided a huge bullish surprise for corn. U.S. corn acres for 2024 were estimated at 90.0 million acres. Last year was 94.6 million acres, a decline of 5%. Trader estimates for corn were 91.8 million acres. In addition, U.S. corn stocks were estimated at 8.350 billion bushels, 95 million bushels below trader estimates. Soybean acres were estimated at 86.5 million acres, up 4% from last year. The combination of corn acres and corn stocks below trade expectations were much welcomed by Ohio and U.S.… Continue reading

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A look at the March planting intentions report

By Jon Scheve, Superior Feed Ingredients, LLC 

Of the 15 reports put out by the USDA each year the March planting intentions report is arguably the fourth or fifth most anticipated report of the year.

For corn the USDA surprised the market by dropping planting intentions to 90 million acres which is 1 million acres below what the Economic Forum printed in the middle of February. In the last 17 years the number of planted acres posted in the June report was higher than the intended acres of the March report 9 times. On average the amount of increase in acres to the June report was around 1 million acres.

Where do prices go now?

In the last 10 years the price of May corn on report day has moved up or down more than 20 cents only 1 time. In 8 of the last 10 years, the price of May corn the week after the report was trading in the opposite direction from the starting point it traded on report day.… Continue reading

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Disappointing wheat prices

By Doug Tenney, Leist Mercantile

Following a great dinner at home recently, Cindy asked, “So, Doug, if you were preparing tomorrow night’s meal, what would you make?” Hmn…My response, “Remember that time I made a baloney omelet?” I was immediately disqualified. Producing a meal requires skill, planning, experience, and common sense — just like producing crops. No baloney about that!

Recent price activity for CBOT wheat has been extremely disappointing. During the first half of December 2023, July CBOT rallied to $6.66 in the midst of a 3-day buying spree when China bought 41 million bushels of US wheat. Fast forward to the week of March 11. Disappointment was plentiful when in 3 successive days China announced several cancelations of U.S. wheat purchases totaling 18 million bushels. That same week China was also canceling wheat purchases from Australia and France. Corn, soybeans, and wheat all took huge price declines from December into February.… Continue reading

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Bullish numbers for corn March 28

By Doug Tenney, Leist Mercantile

U.S. corn acres were a surprise at the decline.

Have a safe weekend as your families gather to celebrate Easter in numerous family traditions.

One point to remember today. Rarely are both corn and soybean acres bullish or bearish. In addition, today marks the end of the week, end of the month, and end of the quarter.

USDA today released two reports, U.S. Prospective Plantings and U.S. Grain Stocks as of March 1. Those two reports detail U.S. numbers only. 

Following the noon USDA report release, corn up 12 cents, soybeans up 2 cents, and wheat up 8 cents. Just before the report was released, corn was unchanged, soybeans down 12 cents, and wheat up 4 cents.

U.S. corn 90.0 million acres, last year 94.6 million acres. U.S. soybeans 86.5 million acres, last year 83.6 million acres. U.S. wheat 47.5 million acres, last year 49.6 million acres.… Continue reading

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Are corn lows behind us?

By Jon Scheve, Superior Feed Ingredients, LLC 

Some market participants are saying the near-term lows for corn may be behind us for now. They point to this recent 30-cent corn rally, after two months of significant price decline, as evidence. They go on to say corn could rally further into spring from weather issues, plus there is a 30-year average trend that shows corn usually rallies from March into June. 

While I hope these predictions are right, I’m concerned that they may not be. The following charts compare December 2024 corn futures prices for the calendar year so far to other marketing years.

Years with tight carryout — Higher prices were necessary to ration demand 

So far, 2024 is not behaving like the years in this chart. This could be because there is a large carryout right now, unlike the other years in this group.

Years with large carryout — December prices started much lower than where it is currently trading

The marketing years of 2016, 2017, and 2018 followed years with large carryout and had above trendline yields.… Continue reading

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Crop insurance is not marketing

By Jon Scheve, Superior Feed Ingredients, LLC 

Crop insurance is a great tool to protect a farmer’s production risk. It guarantees that if something happens during the growing season, the farmer is protected from catastrophic losses. 

However, some farmers think their revenue protection crop insurance is providing a floor price for their grain that protects them against falling crop prices. I believe that is an incorrect thought process and I think that crop insurance should be thought of as a revenue protection tool. This is because it considers both price and production in its calculations. Let me explain.

First, some farmers believe their revenue protection price is guaranteed at the spring value, which is $4.66 this year. Unfortunately, it is not. The revenue protection is based on the level of insurance farmers buy. If a farmer elects to buy the highest level of coverage, they can only get 85% coverage. If we use that coverage value as the example this means the price value of the floor protection is actually $3.96 ($4.66 spring value x 85% coverage).… Continue reading

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Not much excitement in March 8 USDA numbers

By Doug Tenney, Leist Mercantile

Report highlights: U.S. corn exports and ethanol unchanged. U.S. soybean exports and crush unchanged. Brazil soybean production down just 1 million tons.

Trade expectations: U.S. soybean exports to decline, U.S. corn for ethanol to increase. Brazil soybean and corn production to decline.    

Following the noon USDA report release, corn down 1 cent, soybeans down 2 cents, and wheat up 6 cents. Just before the report was released, corn down 3 cents, soybeans down 6 cents, and wheat up 7 cents.

U.S. 2023-2024 ending stocks: corn 2.172 billion bushels, last month 2.172 billion bushels; soybeans 315 million bushels, last month 315 million bushels; and wheat 673 million bushels, last month 658 million bushels. 

USDA this month estimates Brazil soybean production at 155 million tons, last month was 156 million tons. Brazil corn production was estimated at 124 million tons, last month was 124 million tons. Argentina soybean production was 50 million tons, last month was 50 million tons.… Continue reading

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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.… Continue reading

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2023 soybean sales

By Jon Scheve, Superior Feed Ingredients, LLC 

The soybean market has lost nearly $3 per bushel in value from early November. Most of this steep decline is due to South America’s crop getting bigger and worldwide demand not increasing at the same speed. There are some in the trade expecting bean prices to rebound.

Several South American crop watchers are reporting that yields there are shrinking due to dry weather during the growing season. However, these groups may not be taking into consideration that overall planted acres may have increased significantly compared to last year, which could have offset much of the yield losses. 

Also, some market participants think the current reported USDA’s crop size of South America is higher than it should be. They point to CONAB, Brazil’s equivalent to the USDA, lowering their yield estimates the past few months to a total production under 150 Million Metric Tons (MMT).… Continue reading

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Is a market rally coming?

By Jon Scheve, Superior Feed Ingredients, LLC 

If you are unsold or unprotected, the markets have been hard to watch. This has led many market participants to talk about how funds are short a record level of contracts. These groups seem to believe the funds will begin covering their shorts soon and the market could then rally 20 to 50 cents. 

How likely is this?

For a big rally to happen there will need to be a spark to ignite it. This would mean either a demand increase or a supply problem somewhere in the world.

How likely is a demand increase?

Demand increases are usually slow to develop and often take longer than a year to gain traction. For example, the soy crushing plants expanding to make renewable energy throughout the U.S. may work, because it would require more bean acres, which could eventually help corn prices. However, many of these additional plants are not scheduled to be up and running for 18 months to 2 years.… Continue reading

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Crop insurance deadlines coming

By Doug Tenney, Leist Mercantile

Last month Cindy and I were talking about the upcoming solar eclipse as Ohio will be one of several states to experience the event. I mentioned to the need for some type of eye protection, more than sunglasses, perhaps even a welding helmet would be needed. She asked, “What’s a “Wally Helmet?” I slowly spelled, “w-e-l-d-i-n-g helmet.” I guess I talk too fast. The partial or total eclipse will traverse Ohio in a line from west of Cleveland and southwest to Greenville beginning at 1:59 pm that afternoon. Just like the proper equipment will be essential, it will be necessary to relay exact information at precise times in preparation for the spring planting season to be termed a success. At any rate, she’s still teasing me about my Wally helmet.

Ohio’s producers have until March 15 to make their final decisions on their crop insurance coverages for 2024 corn and soybeans.… Continue reading

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Soybeans bearish with two negative punches

By Doug Tenney, Leist Mercantile

U.S. highlights — Few changes were expected. U.S. soybean exports were lowered 35 million bushels, more than expected. The Brazil soybean production was down, but not as much as expected. 

Trade expectations: U.S. soybean exports reduced, Brazil soybean and corn production to be reduced.    

Following the noon USDA report release, corn was down 2 cents, soybeans 2 cents, and wheat  down 11 cents. Moments before the report was released, corn was down 2 cents, soybeans up 11 cents, and wheat down 13 cents.

U.S. 2023-2024 ending stocks: corn 2.172 billion bushels, last month 2.162 billion bushels; soybeans 315 million bushels, last month 280 million bushels; and wheat 658 million bushels, last month 647 million bushels. 

Trader estimates for 2023-2024 US ending stocks: corn 2.152 billion bushels; soybeans 243 million bushels; and wheat 684 million bushels. 

USDA this month estimates Brazil soybean production at 156 million tons, last month was 157 million tons.… Continue reading

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Dismal grain exports not helping prices

By Doug Tenney, Leist Mercantile

Last month Cindy and I were at a local restaurant. I asked, “See anyone you know?” Her response, “I know you.” Since waiting isn’t one of my gifts, she suggested I take a walk among the tables because I always find at least one familiar face. For once I had no success. Here’s hoping your efforts to secure needed workers as well as getting equipment field ready for preparation and planting does not come up as empty.

Grain prices to start the New Year were not friendly as they continued their downward trend and moved even lower for the first month of 2024. In January, corn was down 23 cents, soybeans down 76 cents, and wheat down 33 cents. Fundamentals are sorely lacking at this juncture for 2024 as producers come to grips with a lots of doom and gloom for grains. Money flow, demand, and world grain supplies are the main drivers as we move further into 2024.… Continue reading

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Preventing the use of “free” storage

By Jon Scheve, Superior Feed Ingredients, LLC 

Once again “free” storage is being advertised throughout the corn belt. While some also call it “price later opportunities,” “delayed pricing” or “DP” it refers to when farmers sign over their grain to an end user or commercial facility, and then wait to price the grain later, hopefully at higher values.

On the surface, “free” storage seems like a win-win for farmers and end users or buyers. These “free” storage programs are a great way for end users to procure grain supply during the winter. And farmers can move their grain now when they are not busy, and price later during a potential rally. Unfortunately, “free” storage ends up costing ALL farmers, those using it and those that do not. 

Why does “free” storage hurt all farmers?

When end users offer this program, it is usually because they are having difficulty procuring enough grain to meet their immediate needs.… Continue reading

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A look at corn prices moving forward

By Jon Scheve, Superior Feed Ingredients, LLC 

The corn market might have finally found a temporary bottom, but everyone wants to know what direction corn prices will go in 2024. Weather here and around the world is the biggest price driver, but it is impossible to predict long term. Therefore, below are three charts that could provide some historical perspective for upcoming marketing plans.

Corn yields from 1975 to 2023

Since 1975, the national yield has increased from about 90 bushels per acre to nearly 180.

Over the last nearly 50 years, the average national yield has been within 2 bushels of or above the trendline yield almost 75% of the time. Using a linear trendline suggests that statistically, this year’s corn yield could be around 180.5. In most years, the weather is favorable enough to produce a normal crop across the U.S. as a whole. 

When will futures prices hit the high for the year?… Continue reading

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Don’t give away your risk premiums

By Jon Scheve, Superior Feed Ingredients, LLC 

There is simply too much corn in the U.S. this year. Production issues in Mato Grosso in April or May or in Iowa and Illinois in July are most likely the best chance for significantly higher prices.

Growing specialty corn (i.e. seed, white, non-GMO, high oil, silage, etc.) is popular with some farmers because there is usually an added premium to grow any corn not used for feed, export or ethanol. There can be several reasons for the premium:

  • Proximity to a specialty corn buyer
  • Risk of a potential yield reduction 
  • Increased weed treatment and/or insect cross-pollination 
  • Need for additional storage for identity preserved crops
  • Harder to replace if there is a production issue at a local level.

Most farmers do not want the hassle, or risk, of raising these crops. That is why there are big premiums. If everyone was doing it, there would not be a premium.… Continue reading

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Recent weeks tough on grain prices

By Doug Tenney, Leist Mercantile

Cindy and I were recently trying to efficiently navigate a crowded aisle at a local store. As she opted to cut to the left, I deemed right to be the faster option and chose to guide her in that direction. As per kindergarten teacher training. I heard, “uh we don’t push” with the accompanying “look.” As we left the store, she kindly reminded me, “Doug, steer your truck, not your wife.” Now that was funny, and laugher is always the best medicine. (Lesson learned).

The last 3 months of 2023 were not kind to grain prices as corn, from its mid-October high at $5.21, closed on Dec. 29 at $4.71. Soybeans had a mid-November high at $14.10, closing on Dec. 29 at $12.98. That trend continued into the first 2 weeks of January with further declines. The Jan. 12 USDA report day was a “Bad Day at Black Rock,” to borrow the title from a short story by Howard Breslin and published by The American Magazine in January 1947.… Continue reading

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