Market Analysis

By Jon Scheve, Superior Feed Ingredients, LLC 

Some in the trade are questioning the national corn yield after the USDA lowered it this week. Early field reports I am seeing across the country would suggest the yield is better than some are expecting. In 8 of the last 22 years, the national yield average went up from the September report to the January report, so there is a chance the national yield can still increase.

Corn export demand, on the other hand, is lousy. The USDA has estimated it should be running more than 20% higher at this point in the marketing year verses last season, but it is currently running nearly 10% behind last year’s pace. This makes a sustained corn rally difficult even if the yield does get smaller in future reports.

Do the “quick ship” high basis bids mean the U.S. is out of corn?Recently some farmers on social media have suggested the U.S.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Dry weather is contributing to declining water levels on the Mississippi River. This could make it difficult for U.S. crops to remain competitive globally because it will drive up the cost to ship grain to the export houses. 

The market continues to trade in a tight range while waiting for more crop conditions news. Crops under the most stress in key growing areas of the Corn Belt will be harvested first and will likely have poorer yields. Everyone wants to know how much better the later harvested crop yields will be, and if it will make up for the areas that suffered.

Splitting futures and basis sales

Last week I shared where I set my cash sales compared with prices since harvest as seen in this chart:

This prompted a question from a farmer “What would have happened if I had sold cash corn at the top of the futures market on May 16, 2022?”… Continue reading

By Bennett Musselman, Leist Mercantile

U.S. highlights — Corn 2023 production 15.100 billion bushels and a yield at 173.8  bushels per acre (bpa). Last month 15.111 billion bushels, yield of 175.1 bpa. Soybean 2023 production 4.1 billion bushels, last month 4.205 billion bushels. 

Even though USDA lowered the national yield by 1.3 bpa, total production did not decrease as expected. USDA increase harvested area for grain by 0.8 million acres. Additionally USDA also increased harvested acres on soybeans by 0.1 million acres. Soybean crush forecast is reduced 10 million bushels and export forecast is reduced by 35 million from last month due to lower supplies.  

Following the noon USDA report release, corn was down 8 cents, soybeans down 11 cents, and wheat down 2 cents. 

US 2023-2024 ending stocks: corn 2.221 billion bushels, last month 2.202 billion bushels; soybeans 220 million bushels, last month 245 million bushels; and wheat unchanged

Trader estimates for 2023-2024 US ending stocks: were corn 2.140 billion bushels; soybeans 207 million bushels; and wheat 613 million bushels.… Continue reading

By Doug Tenney, Leist Mercantile

Cindy was on the ladder removing an abandoned swallows’ nest from the porch light while I cleaned the big trash bin. She reminded me to spray it with disinfectant. She had a “birds-eye” view of my project. So when I fetched a bottle of spray she said, “That’s air freshener.” I shortly reappeared with bottle number two. As she descended the ladder, she said, “Doug, that’s also air freshener.” Who knew? She hands me the yellow bottle of disinfectant, which I immediately recognized. I was obviously on the “just get-er-done channel,” caught in the act! I have an appreciation for producers’ attention to detail and care as we prepare for the upcoming season of harvest. Patience matters!

It’s no secret that some Ohio corn producers are already anticipating a near record or new record corn yield in this growing season. The last week of August much of central and western Ohio was tremendously blessed with one huge unexpected rain with totals often reaching 1 to 2 inches.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Usually by this time of year there is more clarity around yield potential, but the extent of possible late season heat damage is creating some uncertainty in the market. Right now, the bean market likely has more upside potential than corn, because August weather is more critical for bean development.

Final thoughts on the 2022 corn marketing year

Over the last few weeks, I have been reviewing my 2022 crop sales to evaluate performance and see how I can improve my grain marketing strategies going forward. 

At first, I was a little disappointed with the average sales of $6.42 corn futures for 2022. However, it is easy to forget that waiting until spring the previous two years had led to values between $7.50 to $8.00, and market conditions this year suggested it could happen again. The following chart shows the spot futures market the previous two years.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

The recent Pro Farmer Tour estimated a national yield of 172. This is up 4 bushels per acres from last year’s prediction. However, in 7 of the last 11 years, the Pro Farmer’s corn yield estimate was between 2 and 6 bushels below the final USDA yield estimate. 

The market seems to be trading something closer to the August USDA production estimate. Weather data to this point throughout the Corn Belt, along with satellite imagery, and computer modelling is indicating that yields are likely still in the upper 170s.

Even if the yield is reduced to the value Pro Farmer’s Tour predicted U.S. export pace is dramatically behind what is needed to reach the USDA’s target. It is beginning to seem unlikely that carryout will drop below 2 billion bushels in the coming year. That could make price rallies difficult until something changes.

As I shared the past two weeks, I marketed my corn this year by first setting my basis and then working the spread markets.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

It looks hot and dry for the next two weeks. Corn might be far enough along that it will escape with only minor damage. Beans however could be facing some reduced yields if there isn’t some relief in a week or so.

Global corn production uncertainty and export demand

There are reports that China has had some corn production issues due to excessive rain. Estimates indicate a 3% crop loss, or 300 million bushels, which could mean increased global export demand.

However, this may not be enough to raise prices. Brazil’s second corn crop this year looks to be 400 million bushels bigger than originally expected, and Argentina is expected to produce a normal crop in 2024.

Plus, Ukraine’s corn shipment capabilities continue to have an uncertain future. While their corn yields are expected to exceed last year’s production, moving grain out of the country could be an issue if Black Sea routes are closed.… Continue reading

By Doug Tenney, Leist Mercantile

A while back the seals failed in top and bottom sashes of one of our sunroom windows. Cindy tackled the project of paperwork and photos of the cloudy glass to order replacements. We picked them up and I leaned them against the wall in the garage. Rather than add the installment to my “overdue to-do list,” she chose to bring them in and managed to remove the damaged bottom sash, aware that rain was in the forecast that evening. So when I came home, I had no choice but to finish the project which was really less “paneless” than I expected. So she won that one!! Here’s to hoping your fall equipment preparation list will go as smoothly and that you have some choice in the matter.

The Aug. 11 USDA WASDE Report was viewed as neutral with numbers close to trader expectations on several fronts.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

The USDA report was neutral at best for corn. Yes, they lowered the corn yield, but demand decreased almost as much, leaving carryout at 2.2 billion bushels. Historically, when carryout has been over 2 billion, it has been too much corn for the market to handle. 

Moving forward, the average yield may still change, but recent weather is indicating it may not shrink by much, and it may even increase. Export pace is the corn market’s biggest issue, because it is not even close to meeting USDA estimates. A demand increase will be needed to keep prices from becoming overvalued. If the market does pull back, demand could increase.

Setting basis on my 2022 corn crop

As I have shared before, I have 100% storage capacity for my crop on my farm. Having this much storage helps with harvest logistics and allows me to maximize profitability from market carry and more basis opportunities.… Continue reading

By Doug Tenney, Leist Mercantile

U.S. highlights — Corn 2023 production 15.111billion bushels, yield 175.1 bpa. Last month 15.32 billion bushels, yield of 177.5 bpa. Soybean 2023 production 4.205 billion bushels, last month 4.300 billion bushels, soybean yield 50.9 last month 51.3.  

More U.S. highlights – U.S. corn exports for 2022-2023 down 25 million bushels, corn for ethanol unchanged. US soybean exports for 2022-2023 unchanged. New corn exports down 50 million bushels, new soybean exports down 25 million bushels.   

Potential surprises with this report

Traders are expecting the U.S. corn yield to decrease two bushels per acre. Some are suggesting corn yields could be better than earlier projected and don’t jive with weekly crop conditions reports which are among the lowest since the 2012 drought year. Second, U.S. soybean acres could be increasing as some thoughts indicate that the USDA big decline of 4 million acres compared to trader estimates on the June 30 Acreage Report may not be accurate.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

In July the USDA lowered their yield predictions due to extreme dry conditions in May and June. Now everyone will be watching today’s August WASDE report to see if the yield estimate is changed again and by how much. 

Since so much is riding on what the national yield will be, most traders are trying to predict what it will eventually be using several different tools. The following are just a few:

Weekly crop condition reports

Some market participants monitoring the USDA’s weekly crop condition reports say that overall conditions are worse this year versus last year, which suggests the 177.5 July estimate from the USDA is too high. But in this week’s report corn conditions are now only 1% lower than last year.

The problem with weekly crop condition reports is that they are subjective and based on someone’s opinion of how the crop is progressing.… Continue reading

By Doug Tenney

Last month, as Cindy and I on a weeknight walked into an out-of-town restaurant, we were warmly greeted by four farmers I’ve enjoyed knowing for many years, Denny, Rick, Ron, and Russell (you know who you are). Cindy says she can’t take me anywhere without me seeing someone I know. She took some fun teasing from those guys. To their surprise, she dished it back. It was great to see them laughing, relaxed and enjoying a meal together. Farming is life and life is farming. It’s something to value and celebrate in the field as well as the table!

The Black Sea Grain Initiative (BGSI) ended last month on July 17 as expected. The last 10 days of July, Russia bombed Ukraine grain facilities for five consecutive days which included three grain export facilities in the Black Sea as well as one facility on the Danube River. The EU has been discussing the idea of working with Ukraine in order that its grain could be exported through other European ocean ports.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Corn rallied this week mostly because Russia closed the Black Sea corridor and then bombed the port facilities in Odessa, Ukraine. Over the past year, this corridor has allowed a lot of grain to be transported out of the region. Therefore, if no new trade deal is finalized and the grain movement infrastructure is destroyed, upside price potential could be very high. However, if the trade corridor is renewed, then there likely will be a market pull back.  

Generally, the U.S. corn crop seems to have had nearly ideal July weather with timely rains to this point. While nothing is guaranteed yet, weather risk in the market is decreasing every day.

Market Action – 2023 Corn futures sales

Corn Trade 1– Futures sale

On 9/7/22, I sold the first 10% of my 2023 corn crop at $6.25 futures, which was at least 60 cents higher than my breakeven point for the year.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

Corn

Usually, the July USDA report does not have yield adjustments, but this year there was a change to the estimated corn yield due to excessive dry weather in June.

Export demand

While weather is always a big factor, long-term demand may also become an issue. The USDA continues to estimate a 27% increase in export demand for next year. However, considering Brazil’s record crop being harvested, and likely an even bigger crop next spring, it is unclear where the added demand will come from. Perhaps the USDA is building a reserve in the demand area in case yields drop further throughout summer. 

Feed demand

Old crop feed demand was changed to match the stocks report from two weeks ago. Moving forward it will need to increase to warrant higher prices, which means more animals will need to be on feed, and that seems unlikely.… Continue reading

By Doug Tenney, Leist Mercantile

US highlights – Corn 2023 production 15.320 billion bushels and a yield at 177.5  bpa. Last month 15.265 billion bushels, yield of 181.5 bpa. Soybean 2023 production 4.3 billion bushels, last month 4.510 billion bushels. Note that the drop in US soybean production for 2023 is down significantly due to lower acres which were detailed with the June 30 Acreage Report.

More US highlights – US corn exports for 2022-2023 down 75 million bushels, corn for ethanol down 25 million bushels. US soybean exports for 2022-2023 down 20 million bushels, crush unchanged.  

World highlights – Brazil soybean production 156  million tons, last month was 156 million tons. Argentina soybean production 25 million tons, last month was 25 million tons. Brazil corn production 133  million tons, last month 132 million tons.

USDA today projected China would be importing 99 million tons of soybeans during the current marketing year from September to August.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC

While the USDA report last week was bearish corn, the 4 million acre decrease in beans from the March planting intentions was bullish.  Plus, old crop stocks were adjusted down slightly too.  Both of these factors contributed to the $1.20 rally last Friday and this previous Monday. However, by the end of the week beans had pulled back over 70 cents but are still up 50 cents from just prior to the report.

Following provides some report highlights for beans.

Harvested vs Planted Acres

Like corn, the USDA’s estimated harvest rate more closely resembles 2013 to 2017 versus the lower rate from 2018 to 2022.  Considering bean’s higher value this year though, the increased harvest rate may end up being more accurate.  If the average from the last five years is used, carryout would decrease by 10% and likely send prices higher over time.… Continue reading

By Doug Tenney, Leist Mercantile

Balance. It is a quality all of us wish for and want to hold onto. Grain producers long for balance as it can provide more certainty for the bottom line. Grains were considerably out of balance on the June 30 USDA report day with two separate reports. First, the Quarterly Grain Stocks Report and second, the U.S. Acreage Report. Just hours and days ahead of those two reports, many had suggested the Quarterly Grain Stocks Report would be the more important of the two. Wrong. Instead, the acreage report provided an immediate blistering amount of fireworks and price implications. It has been long an assumption that USDA reports can often provide a surprise.

June 30 was a classic example of a stunner as balance was certainly missing for over two hours from the noon report release until trading ended at its normal 2:20 pm ET. Corn and soybeans closed different with December CBOT corn down 33 cents while November CBOT soybeans closed up 77 cents.… Continue reading

By Doug Tenney, Leist Mercantile

U.S. weather continues to see odd occurrences this growing season. Here’s a perfect example. The first week of June frost warnings took place in the northern regions of Michigan while at the same time the Dakotas were experiencing temperature extremes in the 90s. In addition, Canada’s forest fires in the far eastern part of the country pushed smoke into Ohio and other states as it moved from the east to the west, a very odd movement of wind directions, resulting in air quality conditions for central Ohio to reach red levels.

Grain prices detonated, roared, and exploded into life the second week of June with continuous weather forecasts of dry conditions in expanding areas of the U.S. Midwest. Grains were sharply higher on June 16 compared to the previous week, old corn up 36 cents, new corn up 67 cents, old soybeans up 80 cents, new soybeans up $1.38, with wheat up 58 cents.… Continue reading

By Jon Scheve, Superior Feed Ingredients, LLC 

The USDA report suggested farmers last spring paid attention to lower fertilizer costs and higher December corn values by planting more corn. Historically, when crops are planted quickly more corn acres are added at the expense of beans. 

Harvested vs planted acres

Digging deeper into the June 30 report, the USDA’s harvested acres as a percent of planted seems to mirror the average from 2013 through 2017 instead of the last five years. If the average of the last 10 years was used instead, there would be a 500,000-acre reduction for total production. If the average from the last five years was used, it would reduce harvested acres by 1 million. This could mean a potential carryout reduction of 90-180 million bushels or 5% to 10% decrease sometime in the future.

Sorghum

Sorghum plantings were up nearly 1 million acres from the spring estimates.… Continue reading

By Doug Tenney, Leist Mercantile

USDA numbers today include US Quarterly Grain Stocks Report as of June 1 and US 2023 Planted Acres.  The quarterly stocks report will be the most watched report today.

US grain stocks: corn — 4.106 billion bushels; soybean stocks —  796 million bushels; and wheat stocks — 580 million bushels. US acres: corn —  94.1 million acres; soybeans —  83.5 million acres; and all wheat — 49.6 million acres.

Two big surprises today, corn acres at 94.1 million acres, bigger than expected, soybean acres 83.5 million acres, smaller than expected. At one point today, soybeans were up 80 cents.

Note: USDA reports today did not include supply and demand tables (WASDE) which is normal for the reports on June 30. The next WASDE report will be on July 12. That report likely includes U.S. corn exports declining at least 25 million bushels. However, don’t look for U.S.… Continue reading