Market Analysis

Is The Record Ag Trade Deficit Cause For Alarm?

Mon, 11 Aug 2025 18:15:48 GMT

The U.S. agricultural trade deficit hit a record $28.6 billion the first half of 2025, according to data released from USDA.

(FJM)

It’s due to weak production growth, increased demand for imported food and ongoing trade conflicts.

In June alone, the value of U.S. agricultural exports trailed imports by $4.1 billion. It’s a gap that’s 14% wider than a year ago.

Not Time To Panic
The trade deficit is one of the main reasons President Trump has given for why he’s imposing tariffs and working on new trade deals.

But former USDA chief economist Joe Glauber, who is now a senior research fellow with the International Food Policy Research Institute, says the trade imbalance is not as alarming as it looks on the surface.

He says that’s partly because the U.S. imports many products it can’t grow — like seasonal produce.

“We kind of define ‘What are agricultural exports?’ and ‘What are agricultural imports?’” Glauber says. “They’re very different in one sense. In fact, we export a lot of bulk commodities like corn, wheat and soybeans and import a lot of fresh fruits and vegetables. And there are obviously some products that compete against each other, but by and large, we’re importing and exporting very different things.”

Skewed Definition
Furthermore, the definition of what constitutes an ag export includes some bulk commodities, but not their value-added end product.

“We import calves and feeder cattle from Canada and Mexico, we import hogs from Canada that are then finished and slaughtered. Whats showing up as imports is actually a part of the production process,” he adds.

Lower Grain Prices Are a Factor
The widening deficit marks a historic reversal for U.S. ag, which ran major trade surpluses for the past five decades. But Glauber says for the last three years, the data has been skewed as prices for bulk commodities, like grain, have fallen — especially compared to the $200 billion of ag exports in 2022.

“If you were to consider what we exported last year in terms of volume and valued them at the prices in 2022, we’d be back at the $200 billion marker. So, with almost no deficit if the prices were reversed,” he explains.

That’s why Glauber says he’s not overly concerned about the trade imbalance.

“I think a surplus or deficit, as far as I’m concerned, is meaningless. What is really important, I think, is improving market access for U.S. agricultural products.”

The Exception
One exception is China, where the trade war has cut exports in half.

Commerce department data shows the U.S. exported just $5.5 billion to China the first half of 2025 — verses $11.8 billion last year.

In June alone, exports were the lowest since 2010, with no soybeans at all.

Commodity Brokers Call CFTC's Proposal to Expand Ag Futures Trading to 24/7 a 'Nightmare'

Fri, 23 May 2025 16:23:05 GMT

The Commodity Futures Trading Commission (CFTC) is proposing to expand agricultural futures trading hours to a 24/7 schedule. CFTC says the change would make the market more vibrant, while brokers and commercial hedgers say it would lead to more volatility and more costs.

CFTC says the proposal is one that better reflects the changing dynamics of the markets.

“As I have long said, the CFTC must take a forward-looking approach to shifts in market structure to ensure our markets remain vibrant and resilient while protecting all participants,” says acting Chairman Caroline D. Pham. “One evolving trend is the move to 24/7, 24/6 or 24/5 trading hours. I look forward to the public comments on this market innovation.”

According to the National Grain and Feed Association (NGFA), who opposes the change, the move to expand trading hours would increase costs and spur more volatility.

“Our members have been clear — expanding trading hours to 24/7 would disrupt current risk management practices, increase operational costs, and create unnecessary exposure,” says Mike Seyfert, president and CEO of NGFA, an organization with commercial hedgers as part of its membership base. “We hope the CFTC will recognize that longer trading hours do not equal stronger markets.”

The proposal is currently in a comment period. In NGFA’s feedback and formal letter, the organization listed five reasons why it is against the proposal, including:

Spreading liquidity across a wider trading time frame would create unnecessary volatility, potentially widen bid/ask spreads and expand potential for market manipulation.
The underlying cash market does not trade 24/7, thus having futures markets open for more hours while cash markets are closed would create additional exposure and risk for our members.
Its members perform their daily reconciliation functions when markets are closed. This function is critical in managing risk and exposure in cash markets.
A pause in trading in futures markets is essential for physical deliveries. This pause allows those involved in physical deliveries to assess what is changing in cash markets as well as in futures markets and ultimately their delivery economics. NGFA says that actions in the delivery market are what lead to convergence, and convergence is a critical function of the agricultural futures contracts that benefits it members.
Staffing costs for its members would unnecessarily increase to add monitoring of futures markets during the expanded weekday hours and weekends.

Market Analysts Weigh In

Brian Splitt of AgMarket.net agrees with NGFA’s analysis, saying expanded trading hours has been tested before in livestock, and it led to more volatility.

“It sounds like a nightmare to me,” Splitt said on U.S. Farm Report. “There’s a reason that the exchange tightened the trading hours for livestock. We used to trade livestock overnight, similar to what we do with the grains, and the volatility was just ridiculous. It didn’t take a lot of contracts to make the market move quite a bit. And so, I think the market just needs a rest period. I don’t see a reason why the market needs to trade 24 hours a day.”

Splitt argues the markets need some type of pause, especially with fewer traders who participate in the overnight markets. And with fewer traders, it takes fewer individuals to influence the market, which Splitt argues is dangerous.

“I agree with Brian, I think it’d be horrible,” says DuWayne Bosse, a farmer who also is the founder of Bolt Marketing. “I think the trading hours are actually too long right now. We have this kind of long pauses in between market news that the market just gets pushed and shoved by algos and volume traders, and that makes what I would call kind of wrong technical pictures on the chart. So, I think it would be a mistake.”

Comments on the proposal, which could be submitted electronically through the CFTC Comments online process , were accepted through May 21.

What USDA Corn and Soybean Acreage Estimates Would Shock the Market On Monday?

Fri, 28 Mar 2025 12:14:21 GMT

Anticipation has been building ahead of USDA’s Prospective Plantings and quarterly Grain Stocks reports on Monday, March 31. Not only is USDA releasing its first survey-based acreage report of the year, but it’s the week President Donald Trump is set to unleash reciprocal tariffs. Market analysts warn it could be an explosive week in the markets, and farmers should prepare.

Pre-report corn acreage estimates by Reuters range from north of 96 million to below 93 million. For soybeans, the range is 82.5 million to 85.5 million.

🇺🇸Analysts see 2025 U.S. #corn plantings at 94.36 million acres and #soybeans at 83.76 million.
▪️Larger-than-normal range of estimates on corn; 3 of 22 analysts above 95.0M
▪️-3.8% predicted drop in soy acres YOY, the largest drop analysts have predicted in March since 2007 pic.twitter.com/itlriMiDGv
— Karen Braun (@kannbwx) March 25, 2025

USDA’s first glimpse at acreage, though it wasn’t survey-based, was during the Ag Outlook Forum in February. At that time, the agency’s corn estimate came in at 94 million acres, which caught the market by surprise. What would shock the market this time? That’s the question U.S. Farm Report’s Tyne Morgan had for market analysts this week.

“I think most people are thinking it’s going to be something closer to 95 [million],” Shawn Hackett, president of Hackett Financial Advisors, told U.S. Farm Report. “If we printed a 96 number that would be a surprise and the market would have to probably trade lower. That’s the working numbers I’m going with as to what the market has already built into the current price of corn.”

As Mike North, Ever.Ag’s principal of risk management, has traveled the country he’s encountered producers embracing more corn.

“[For corn] to come out higher than what the USDA Ag Outlook Forum projected in February would not be a real shock to me. I think even in this last day you’re seeing it’s settling into what could be a larger number,” North says.

For soybeans, USDA projected 84 million acres in February, which was down 3.1 million acres from the previous year’s final estimate. Hackett thinks soybeans’ double digit price gains on Thursday was the market anticipating lower acres.

“I think that the market, if you’re looking at soybeans, has been pulling in. We started to get some upside Thursday,” he says. “I think the market is starting to get a little worried about a low number and maybe having to reprice the soybean market relative to corn to maybe get those numbers back into balance by the time we get to the June acreage report. There’s been very interesting action in soybeans the last few days and how it’s trading relative to corn and wheat.”

Ahead of Monday’s report, AgWeb compiled details of some of the private acreage estimates.

AgMarket.net Pegs Corn Acres North of 95 Million

Co-founder of AgMarket.net Matt Bennett explains their 45-person team surveyed growers for data.

The brokerage firm is pegging corn acres at 95.39 million.

“Every region, quite frankly, had higher corn acres,” Bennett says. “A couple of retailers in central Illinois said this is the biggest spring run they’ve had for corn-on-corn acres in a long time.”

Soybean acres in the AgMarket.net report sit at 82.75 million.

“Growers just keep telling us we can’t make money with sub $10 beans,” Bennett says.

All wheat acres total 47.82 million, according to the AgMarket.net report, despite spring wheat acres holding strong. The firm points to overall wheat profitability affecting acres.

The estimates from the brokerage and consulting group have been fast-developing as Bennett says pre-plant decisions are still evolving thanks to the weather and the markets.

“There were some [planting] changes made, two weeks ago, literally. I think some folks were putting on anhydrous and said, ‘This is going on like a dream, and then they looked up, saw their cash fall bid for soybeans at $9.70 and thought, I don’t want to do that, I want to do this,’” Bennett says.

Allendale Estimate Falls Below 94 Million Corn Acres

Allendale’s annual acreage survey results confirm higher corn acres at the expense of soybeans.

Their survey shows corn planting intentions of 93.981 million acres, which would be up 3.4 million from 2024. Using 91.23% harvested and a 182.3 bu. per acre yield, production lands at a record 15.633 billion bushels, which is 767 million bushels more than 2024. Rich Nelson, chief strategist at Allendale, says that raises corn ending stocks to 2.1 billion bushels versus 1.54 billion bushels for this year.

Allendale tallies soybean planting intentions at 84.283 million acres. At 98.79% harvested and 52.7 bu. per acre, production totals 4.391 billion bushels, which is 24 million more than last year.

“On the corn side, there were no real surprises compared to what the trade is talking about,” Nelson says. “On the soybean side, which is about 2.8 million lower than last year, that’s maybe a little trimmer than some other people as far as what we happen to be hearing. The biggest question for ourselves in the survey was actually about the spring wheat numbers. Mind you, the Ag Outlook Forum numbers implied no drop in spring wheat for this year, but we’re seeing clear confirmations of some pretty good drops.”

Wheat acreage is estimated at 45.863 million acres, down 0.2 million from last year. Using 81.82% harvested and a 50.1 bu. per acre yield, production comes in at 1.879 billion bushels, which would be 92 million more than last year.

FBN Sees A Shift Away Soybean Acres

FBN’s survey included almost 1,000 responses from its farmer-member network. Cody Bills, director of U.S. Market Advisory & Brokerage at Farmer’s Business Network, says the company has done this report for five years with only a 1.3% error versus USDA’s numbers.

Compared with 2024 crop acres, FBN’s report shows corn acres up nearly 5 million acres in 2025 to 95.5 million acres.

“For corn, we are on the higher side of analysts’ expectations,” Bills says. “It’s a broad shift out of soybeans into corn — out of beans in Iowa, out of beans in Illinois and out of beans in Indiana.We also saw some notable shifts in North Dakota out of spring wheat into corn, and we saw some broad switching out of cotton into corn.”

The shift from soybeans leads to a 3.6 million acre dip comparing 2024 to prospective 2025 data.

“There’s uncertainty around the demand side of soybeans,” Bills says. “When you look at spring prices, when you think about crop insurance, corn is at $4.70, so 4¢ higher than last year. Soybeans are almost $1 lower. The ratio of bean prices to corn prices have slipped. The ratio of soybeans to corn is 2.2:1 this year compared to last year when we were 2.5:1.”

Adding up acres for corn and soybeans, FBN expects that total to be over 179 million.

“We saw some acres out of sorghum into corn. In general, we felt pretty comfortable being in line with the Ag Outlook Forum, which was somewhere around 178 and we’re sitting right around 179,” BIlls says.

Pro Farmer Expects Total Planted Acres to Jump 1 Million

Results of the annual Pro Farmer/Doane planting intentions survey signal there will be a notable shift from soybeans to corn this year. Total corn and soybean plantings are projected at 178.8 million acres, which would be up 1.11 million acres (0.6%) from last year. Total acres planted to corn, soybeans, wheat and cotton are expected to be down roughly 1 million acres at 233.9 million.

“This year happens to be one of the years with some bigger movement, especially on the corn side,” says Brian Grete with ProFarmer.

Based on Pro Farmer’s analysis of survey responses, producers intend to plant 93.75 million acres of corn this year, up nearly 3.2 million acres (3.5%) from last year. Corn acres are expected to increase in all but one key state, South Dakota, with Iowa, Nebraska and North Dakota acres to jump 4% or more and the cotton states signaling a 3.7% increase.

Producers indicate they intend to plant 85 million acres to soybeans this year, down 2.05 million acres (2.4%) from last year. Of the top nine soybean-producing states, six are projected to decrease plantings. Among states indicating a decline, soybean acres are projected to fall an average of 4%. The states noting higher plantings, which are South Dakota, Ohio and Minnesota in the Midwest, are expecting modest increases.

“About two-thirds of the corn acres that are gained are attributable to soybeans,” Grete says. “Every region except the Northern Plains is expected to see a decline in soybean acres.”

Part of that swing can be attributed to prevent plant acres coming back into production, not necessarily a switch from another crop, he adds. Declines in anticipated soybean acres in cotton states are the greatest at 3.9%.

Total wheat acres are projected at 45.4 million, down 680,000 acres (1.5%) from last year. Spring wheat seedings as a whole are expected to decline 590,000 acres (4.6%) to 12.1 million acres. The Pro Farmer survey shows Northern Plains producers will favor durum over other spring wheat. Other spring wheat acres are projected to decline, which is not overly surprising given current prices, Grete says. Contrary to USDA’s winter wheat seedings estimate in January, winter wheat acres are expected to be down modestly. Acres in historical winter wheat areas dropped while Midwest states signaled an uptick. Relatively longer growing seasons and favorable insurance regulations have encouraged Midwesterners to double crop wheat and soybeans.

10 Charts to Help Understand the January Data Dump From USDA

Fri, 10 Jan 2025 22:15:35 GMT

2024 Production and January 2025 Stocks

(Farm Journal)

The 2024 crop was big but not quite as large as USDA originally forecast last fall. In its annual crop production report, the agency released its final tally for 2024.

2024 Production and January 2025 Stocks

(Farm Journal)

USDA says the 2024 corn crop totaled 14.9 billion bushels, down 3% from the 2023 estimate, with a record-high average yield of 179.3 bushels per acre and ending stocks nearly 200 million bushels lower than its December forecast. That’s also well off USDA’s high of 183.8 bushels per acre from October and just slightly above the 2023 average of 177.3.

2024 Production and January 2025 Stocks

(Farm Journal)

“This report was more friendly than just about anybody had expected,” said Joe Vaclavik, the founder and president of Standard Grain. “They did adjust harvest acreage a little bit, but the end result was a crop size that was 276 million bushels smaller than what they had previously reported. This is a great thing for prices and it’s a great thing for farmers.”

2024 set a record for corn yield at 179.3 bu./acre

(USDA)

Vaclavik lamented the timing during an interview with Michelle Rook for U.S. Farm Report. He said better numbers a couple of months ago could have helped farmers make decisions during harvest about sales and storage. Corn futures rose following the report and analysts like Jim McCormick of AgMarket.Net say that’s likely to impact sales in the coming months.

“What’s it going to take to get that farmer to sell that next chunk of corn,” asks McCormick. “Fiscally, farmers are definitely feeling the pinch, and this is going to make for a little bit brighter picture. One thing to keep an eye on, though, new crop corn [futures] is not rising as fast as the old crop today.”

2024 Corn Yield by State vs 2023

(USDA)

The U.S. soybean crop is a different story in terms of production direction. USDA officially puts 2024 production at 4.37 billion bushels with a per acre average of 50.7. Both numbers are higher than last year and above USDA’s previous October per acre yield estimate of 53.1 bushels per acre.

“The report was a little bit friendlier for old crop, but the world situation is still an anchor on the whole complex,” Vaclavik says. “You’ve got these big South American crops expected and big, healthy global balance sheets for soybeans. Whereas in corn, things are tightening up a little bit.”

2024 USDA Soybeans to 50.7 bu./acre

(USDA)

The soybean futures market fought its way back above the psychologically significant $10 per bushel mark following the report release.

“With a very substantial crop, harvest underway in Brazil and selling likely to be aggressive with the Brazilian real as weak as it is, it’s hard for me to see the U.S. exceeding $11 and even then, that might be a stretch,” said Shawn Hackett with Hackett Financial Advisors.

2024 Soybean Yield and Change vs 2023

(USDA)

Looking back to the 2024 Pro Farmer Crop Tour, USDA’s numbers are right on par with the team’s estimates and margin of error. Pro Farmer put its estimates following a weeklong survey of fields in August at 14.97 billion bushels for corn on an average of 181.1 bushels per acre with a margin of error of +/- 1%. At minus 1%, the Pro Farmer estimate matches USDA final production numbers of 179.3.

“USDA’s final corn production estimate came in just 112 million bushels below where Pro Farmer pegged the crop in the third week of August following Crop Tour,” said Brian Grete, editor of Pro Farmer. “We realized the corn crop wouldn’t be as big as USDA estimated as of Aug. 1, though production ended up falling slightly more than we anticipated.”

On the soybean side, Pro Farmer was a little more optimistic, calling for 4.74 billion bushels of soybeans +/- 2% with an average yield of 54.9 bushels to the acre.

“We overestimated the soybean crop following Crop Tour,” Grete added. “At that time, the soybean crop had faced very few weather hurdles and was heavily podded. Unfortunately, a hot and dry finish robbed bushels before harvest.”

2025 Winter Wheat Plantings

(USDA)

Wheat futures ended about even following USDA’s final production tally and global outlook. It says 2024 production totaled 1.97 billion bushels on a 51.2 bushel per acre average. The wheat ending stocks of 798 million bushels were adjusted just slightly higher.

Also released in a flurry of final reports is the total acres seeded to winter wheat for the 2024/2025 crop year. This season USDA says 34.1 million acres are planted. That’s up 2% from a year ago. Crop ratings in Kansas, the nation’s largest winter wheat producer, for November, stood at 55% good to excellent. In early January good to excellent only described 47% of the state. That said, much of the winter wheat areas have seen moisture in the last couple of weeks in the form of snow, ice or rain.

Change in Winter Wheat Planted Acres from 2024 to 2025

(USDA)

Looking globally, USDA is calling for slightly larger supplies, lower consumption, reduced trade and higher ending stocks. The agency expects exports from Russia to fall by 1 million tons while India is dealing with record prices amid dwindling supplies and robust demand.

South American Production
While USDA shares its final U.S. production numbers from 2024, it’s also keeping an eye on the growing season underway in South America. In its World Agriculture Supply and Demand Estimates (WASDE) researchers are forecasting the Brazilian corn crop to be 127 million tonnes, which is right in line with its previous estimates in December but 5 million more than a year ago. Soybeans in Brazil are forecast to be 169 million tonnes. Also steady compared to previous estimates. In Argentina, widespread drought and dryness are a concern for crops now in the heart of the season. However, USDA says it’s sticking with the current production forecast calling for a 51 million ton corn crop and a 52 million ton soybean crop.

2025 WASDE Estimates for South American Crop Production

(Farm Journal)

“When you look at the Brazilian crop, they chose to leave it unchanged this time around,” said McCormick. “I think nine out of ten traders are looking for that crop to get bigger.”

What Impact Will the Fed's Rate Cut Have on Ag Markets?

Thu, 19 Sep 2024 14:57:58 GMT

The Federal Reserve cut interest rates by 50 basis points on Wednesday.

The cut was largely anticipated and so it was already priced into the financial and other markets according to Darren Frye with Water Street Advisory.

He says the markets are now looking forward to determine the additional cuts through the end of the year.

Frye says the move is positive for the agricultural markets because the change in monetary policy will weaken the U.S. dollar index.

That makes the United States more competitive with other export customers and should lead to additional business.

“A lower dollar means higher commodities,” he states.

Grains ended mixed and all the ag markets traded two-sided positioning ahead of the announcement.

Frye says the soybean market was supported by positive supply and demand factors, including disappointing early yields in the Eastern Corn Belt and an increase in export business, particularly to China.

Soybeans did see some early technical buying and managed to get above the 50 day moving average but could not hold that level into the close due to a pick up in harvest pressure and hedge selling.

However, Frye thinks the market will continue to move higher.

Corn ended flat on the day caught in a tug of war between lower wheat and the higher soybean futures.

Wheat saw pressure on profit taking after failing to take out chart resistance plus forecasted rains for the Southern Plains winter wheat areas.

What You Need to Know About USDA's Surprisingly Friendly Changes to Corn, And Why Prices Seem Unimpressed

Fri, 12 Jul 2024 20:30:26 GMT

USDA threw the corn market a curve ball in the July World Agricultural Supply and Demand Estimates (WASDE) report released Friday, and it was a good one with an unexpected cut to old crop corn stocks through increased demand.

Here’s a snapshot of the surprise changes:

· USDA projects corn ending stocks to fall to 1.877 billion bushels, down from 2.022 billion last month

· USDA raised old crop exports by 75 million bushels

· The agency also increased feed usage by 75 million bushels for old crop corn

· Increased new crop corn feed usage by 75 million bushels

Joe Vaclavik of Standard Grain says the substantial increases to old crop demand forecast came out of nowhere.

“It was about the friendliest report you possibly could have received from USDA today,” Vaclavik says. “They added hundreds of millions of bushels of demand. A lot of it was old crop, there was a little bit of a new crop. Relative to expectations, it’s a friendly deal, because that demand that they added for old crop, that’s real demand. Everything on the new crop balance sheet — the yield the acres, the demand — that’s all smoke and mirrors. That marketing year hasn’t started yet, but the old crop stuff is real. And you can take it to the bank.”

However, the markets were unimpressed by the friendly adjustments that came as a surprise to demand. Vaclavik says the report was friendly compared to what it could have been, but corn prices barely inched into the green, with the September corn contract closing 1 ¾¢ higher at $4.02. New crop December contract finished up 4¢ at $4.14 ¾ .

Peter Meyer of Muddy Boots Ag says he doesn’t trust the demand numbers. He anticipated USDA would increase demand, but it was a matter of where, and he says he just doesn’t trust the demand side at this point.

“One of the more telling things to me is that I always look at year on year supply versus demand, and especially in corn, there’s a very high correlation between changes in supply and changes in demand. Total supply now from 23/24 to 24/25 is up 270 million bushels. Demand is up 50. This is very telling to me, because typically during the year, they will adjust that by 50%. And we did a 25-year study where actually the correlation is probably closer to 85%. But the fact that they did not use their 50% rule and increase demand by 135, and only increase it by 50 suggests to me there’s very little confidence in their demand numbers.”

Even with the surprising adjustments to demand in the July WASDE report, the factor haunting the grain market is the fact farmers are holding on to 3 billion bushels of corn in on-farm storage. That’s what USDA’s June Grain Stocks report revealed. And at 3 billion bushels, that’s the highest level of on-farm storage since 1988.

“The general narrative among traders and analysts is that the market cannot rally in a material fashion until that stuff is sold,” Vaclavik says. “I don’t know if that necessarily has to be the case. If you see demand enter the marketplace in a material fashion, and I think it’s got to be on exports, I think that’s what could move the needle real quickly.”

Vaclavik says U.S. corn prices are competitive on the global market again. So, if China or some big buyer came in and really wanted to buy U.S. corn, he says the situation could change, and it could eat into the 2 billion bushels of old crop carryout USDA is currently estimating.

“The new crop marketing year hasn’t started yet. I still think overall, this report today, it was a friendly item. The on-farm stocks issue isn’t, but we did get some good news today,” Vaclavik says.

Meyer says the battle in the market right now is almost a game of chicken between the farmers holding on to a large amount of crop grain, and the funds being record short.

“The funds really don’t have a fundamental view, to be honest with you, they are still trading the path of least resistance, and the farmers are holding on for higher prices,” Meyer says. “I agree with Joe, and this is a friendly WASDE report, but how friendly can it be? $4? $4.25? $4.30? Is that going to get the corn out of the farmers’ hands? I don’t know.”

He says the funds will keep selling and stay short until the farmers capitulate and start selling the corn they have stored in the bin.

“Funds are not stupid,” Meyer says. “They saw those 3 billion bushels in on-farm storage, and they know what’s going on.”

USDA July 2024 WASDE Crop Production Forecasts

(Lindsey Pound)

USDA left yield for corn and soybeans unchanged in the July report, which wasn’t a surprise. For new crop, USDA currently has yield and production forecast as:

· 181 bu. per acre yield for corn with corn production forecast at 15.1 billion bushels.
· Soybean yield pegged at 52 bu. per acre and production at 4.4 billion bushels.

When could USDA adjust yield, and how big of a yield could we see? Plus, why is the corn market immune to the storm that caused widespread hail damage in Nebraska and parts of Iowa this week? Vaclavik and Meyer discuss in the video below.

The Countdown to USDA's Big June Acreage Report: Ag Economists Weigh In on Wild Cards

Mon, 24 Jun 2024 15:13:22 GMT

USDA’s June Acreage report tends to be a major market mover.

Ahead of the June 28 report, we asked ag economists to weigh in on where they think the acreage numbers could land. The majority of economists think we could see more soybean acres than what was revealed in the March Prospective Plantings Repor t, but they don’t expect the corn acreage estimate to grow much.

In the latest Ag Economists’ Monthly Monitor , a survey of nearly 70 ag economists from across the country:

60% of economists think corn acreage will fall in the 90 to 91 million acres range.
That compares to the 91 million acres USDA found when they surveyed growers about planting intentions back in March.
20% think it’ll be even lower, in the 89 to 90 million acres range.
20% also think it could come in higher, at 91 to 92 million acres.
Soybean acreage was slightly higher, with 60% of ag economists saying 87 to 88 million acres.
That compares to the 86.5 million in March.

The No. 1 Thing Farmers Can Do Now

As the market awaits the big report, what are some potential fireworks that could come out of the report? S cott Brown, University of Missouri ag economist who helps author the monthly report, says the big fireworks could come if USDA shifts both corn and soybean acres.

“I think if we get a growth in both corn and soybean planted acres, it will be a negative for markets, at least they’ll respond negatively in the short-run,” Brown says. “I would encourage folks to think about whether there’s any risk management they might want to do before the report comes out. It’s hard to tell, at this point, which side of that. Some ag economists are saying we will see less acres for both corn and soybeans. If that happens, we could get a surprise on the other side as well. I keep saying I think we’ve planted more acres, but we’ll see what happens on the yield side. All of this could continue to put pressure on prices to move lower as we get closer to fall harvest.”

What If Corn Acres Grow?

If corn acres come in around the 91 million acre mark, Krista Swanson, lead economist for National Corn Growers Association (NCGA) , thinks the U.S. balance sheets can handle the shift to slightly more corn acres.

Economists think we’ll gain back little bit of maybe what we lost in terms of principal crop acreage from the prospective plantings report back in March, when we see the June acreage report at least, that’s what the economist that reported this month say.

“It really depends on where yield comes in, and that’s a big question at this point in the growing season,” says Swanson. “Tight now USDA is projecting a 181 bu. per acre yield, and just as a reminder, last year, the 177.3 bushel per acre yield that we had was a record yield. So we’re talking about a yield that’s four bushels per acre above that. So, I think that there’s some question as to if we can actually achieve that level.”

She says if the yield comes in under 181 bu. per acre, and acreage stays around 91 million acres, it could cut the U.S. carryout.

“If we had a yield at 178 [bu. per acre], which would still be a record just edging out over where we were last year, there is a way to end up with carry out below 2 billion bushels. So, it’s the combination of acres, and also where yield comes in this year,” says Swanson.

She says some areas of the U.S. are off to a great start with this year’s corn crop, especially in areas seeing drought relief. However, other areas of the U.S., including Texas and Minnesota, are now seeing too much rain.

“I definitely think that there’s some areas of the country where maybe we’ll have some of those yield impacts due to weather,” she adds.

However, Swanson points out if USDA shows 1 million more acres of corn and 1 million more acres of soybeans, that will put pressure on commodity prices.

The Principal Crops Wildcard in USDA’s June Acreage Report

Another wildcard is what happens with the principal crops number. In March, one of the big surprises was the drop in overall acres this year. USDA’s report showed principal crop acres fell 6.3 million acres year over year. The biggest decline in overall acreage came in Texas, New Mexico, Oklahoma, Kansas and South Carolina.

The Ag Economists’ Monthly Monitor asked economists to weigh in on where they think those 6 million acres could go. More than half said it could go to more corn acres. Some economists think those 6 million acres could also shift to soybeans, cotton or wheat, but a few economists also think USDA could show more hay acres.

Swanson also thinks some of those acres this year shifted to CRP or other climate programs, including solar.

“There was the open enrollment in CRP. I know, just speaking on our farm, in particular, we have we have quite a few acres that we farmed last year that are in CRP for this year. And so you know, that’s one potential place that some of those acres,” she says. “I think that we’ll still be under acres with total principal crops compared to last year, but we’ve also seen expansion of things like solar and that that’s taking up some farmland.”

Swanson says she does expects to not see 6 million acres of lost principal crop acreage in the June report, expecting that number to come down, possibly moving to more corn and soybean acres.

Members of industry agree there are incentives for farmers to plant any potential acre.

Jeff Tarsi, president of global retail at Nutrien, said during the company’s early June investor day that Prevented Planting coverage is not as strong as it has been in the past, and while it may be a tight time window, farmers will want to finish any corn acres they can and also plant soybeans.

“There’s a big difference this year versus in the past–a grower is really not incentivized to take prevent plant this year. And so some those areas where we have seen some crop shifts, what I’m very confident of is we’ll see a crop planted on that acreage in 2024,” he says.

What You Need to Know About USDA's May WASDE Report

Fri, 10 May 2024 19:28:39 GMT

USDA’s May WASDE report sent corn and soybean prices higher, it also caused wheat to soar. However, one analyst questions why the trade viewed the latest report as so bullish, considering the U.S. is still staring at large crops and carryout.

In Friday’s report , USDA provided a first look at the 2024/25 crop production picture. USDA is projecting a smaller corn crop compared to last year. Even with a trend-line yield penciled in at 181 bu. per acre, it’s fewer corn acres that’s causing a lower production picture with USDA penciling in 14.86 billion bushels.

In contrast, more soybean acres prompted USDA to pencil in a bigger soybean crop this year. With a projected soybean yield of 52 bu. per acre, production is forecast to reach 4.45 billion bushels, which is up considerably from last year’s crop size of 4.165 billion bushels.

USDA pegging 2024/25 corn stocks at 2.1 billion, which was below trade estimates. Soybean stocks are projected at 445 million bushels, above trade estimates, and wheat is forecast at 766 million bushels, below trade expectations.

“I didn’t see really anything in it that I thought was all that bullish from it; I thought it was more bearish than anything,” says Jon Scheve, president of grain trading for Superior Feed Ingredients.

Scheve says he took a look back at the May WASDE report from last year to compare USDA’s initial thoughts on the 2023/24 new crop, and USDA had penciled in a 2.2-billion-bushel carryout. He says December 2023 corn was trading at $5.15 then.

“It ends up that we come in now here at just over 2 billion on the carryout, and what we also saw was that the price that the USDA thought the farmer would get would be $4.80 for the average price,” Scheve says. “Now they’re already saying that price is down to $4.65, and we’re struggling to even maintain that value for cash for a lot of farmers across this country.”

Scheve says that’s also one reason he doesn’t see why a bullish reaction stemmed from the latest WASDE report.

“Future reports are going to be over 2 billion, and that’s assuming if we only plant 90 million acres of corn,” he adds.

One of the bullish revisions in USDA’s May WASDE report that might be viewed as bullish is the fact new crop corn carryover came in 180 million bushels below trade expectations.

“Old crop demand was 100 million bushels higher, and then they have new crop demand, higher as well. And so that ended up with a carryout figure that was well under the average estimate,” says Chip Nellinger, founder and owner at Blue Reef Agri-Marketing. “I think that’s certainly something that supports us going into the growing season here. We have to get the crop planted, and we have to make sure that we can get pollinated and have that big crop and that chance at 181- bu. [per acre trendline yield].”

USDA’s first look at the 2024/25 corn crop shows a yield of 181 bu. per acre. The latest look at the U.S. Drought Monitor clearly shows an improving drought picture with nearly 75% of the Midwest is now drought free. Recent rains have wiped extreme drought from Iowa, and the area of the country now in extreme drought is at its lowest level since April of 2020.

With just slightly over 15% of the nation in drought, the rain has been welcome for repairing dryness, but the planting pace is also starting to struggle.

Considering the moisture relief, but also the lagging planting pace in the U.S., can the U.S. hit a 181 bu. per acre corn national yield like USDA currently has projected? Nellinger says there’s a possibility we don’t.

“We’ve never hit it before, right,” Nellinger says. “If you use a five-year average of national average corn yield, it’s 5 bu. to 6 bu. below where they have the trendline at 181. I think the longer it takes to plant this crop, the higher the bar is to hit 181 [bu. per acre].”

He says the longer-term market outlook is really focused on how the weather is in June and July.

“Certainly, we have a lot better moisture than we did before, that’s a good thing to get this crop up and out of the ground, assuming we get the rest of it planted,” he says. “But it doesn’t mean you still can’t have isolated hot and dry weather, and heat, probably more than anything is what we need to worry about.”

Nellinger points out the lack of heat was the salvation for last year’s crop.

“And so there’s still plenty of time for scares out there,” Nellinger says. “In my mind, 181 it’s very doable, but we better get the crop in the ground a lot faster paced, and we have the last two or three weeks here.”

The planting pace will become more in focus over the coming weeks, and according to Scheve, the market is starting to get nervous about the current delayed planting pace.

“If we look at where the market is with a 2-billion bushel carry out, we should be at $4 corn,” Scheve says. “And so because of that, the market has already built 90¢ of weather premium into this, so I would be very concerned.”

Scheve says while it’s true the U.S. has never grown a 181-bu. per acre national corn yield, if you look back in history dating back to 1974, on average, the U.S. sets a new record crop one in every three years.

“So, I would say there’s a ton of weather premium at the moment, but if we don’t have this crop, you know three-fourths planted with within two weeks, then I think that the chances are 50% that we don’t necessarily have to hit trendline yield,” Scheve says.

The South American Production Wild Card

Portions of Brazil faced catastrophic flooding, and now there’s a lot talk about the impact on the crop in South America. The severe flooding that hit Brazil’s southernmost state of Rio Grande do Sul should cause farmers to lose an estimated 1.32 MMT of soybeans, according to data from consultancy AgResource this week.

USDA made slight adjustments to the South America crop in its report, cutting Brazil’s corn crop by 2 mmt to 122 mmt. The soybean crop in Brazil was trimmed by 1 mmt, to 154 mmt.

In Argentina, USDA cut the corn crop by 2 mmt, to 53 mmt, but left soybeans unchanged.

Related May WASDE Report News

WASDE a Mixed Bag for Grains but Rally Continues: Is the Market Trading the Report?

Corn and Soybean Prices Tank After USDA Report Makes Surprising Revisions to Yield

Fri, 12 Jan 2024 19:41:03 GMT

USDA’s final look at crop production for 2023 caught the commodity markets by surprise. The agency increased the final yield estimates for both corn and soybeans, and as a result, prices plummeted on Friday.

The big news in the report was the revisions to yield. USDA raised the national corn yield to 177. 3 bu. per acre in the January report, which is a new national record yield. It’s also a big jump from November, when USDA had the national yield penciled at 174.9 bu. per acre.

USDA also cut harvested acreage, but with the big increase in production, USDA pegs the 2023 corn production figure of 15.34 billion bushels.

The increases to yield and production were larger than what the trade expected, which caused corn prices to sink.

“We got a lot of criticism for our estimate all summer long being too high. And we ended up too low,” says Arlan Suderman of StoneX Group. “This crop, I’m just really impressed with, not just the genetics of it, but farmers with their technology, the seed placement, just the management of it. They are getting better and better at withstanding the stresses and it just makes you wonder how good this crop might have been had we not had the stresses we had.”

USDA also increased demand, which helped offset a portion of the increased yield. USDA increased feed use by 25 million bushels. The agency also increased ethanol use by 50 million bushels.

“Those revisions were pretty much in line with what the trade expected,” says Jim McCormmick of AgMarket.net. “And I guess it’s a good thing because without those upward revisions of demand, this carryout would have really exploded to the upside. And I think the market could’ve had an even worse negative reaction than it’s currently having.”

Surprise in Soybeans

USDA also surprised traders with the increase in the soybean yield estimate. USDA raised it’s soybean yield forecast for the 2023 crop to 50.6 bu per acre, which was up from the 49.9 bu. per acre forecast in November. Soybean production is now pegged at 4.16 billion bushels.

Suderman says these yield increases are something farmers should note, especially with the current debate on how much of an impact weather will have on Brazil’s crop that’s currently in the ground.

“The same genetics we plant here we plant in South America as well, essentially, so we need to look at South America in that same light,” Suderman says. “This crop really did well, especially in eastern Midwest. We saw some really good yields from corn and soybeans this year. And some of that may have been some of the benefits from the smoke coming from the Canadian fires. That’s one of the theories now that was sulfur and some other positive effects were coming from that smoke.”

Cuts to Brazil

After drought impacted Brazil’s crop for much of the growing season, USDA cut its soybean forecast in Brazil to 157 million metric tons. That’s down from the 161 million metric tons forecast in the last report. USDA also trimmed its corn estimate for Brazil by 2 million metric tons.

“Traders were looking for bigger cuts,” McCormick says. “The rhetoric I think was even for bigger cuts and what the average straight guess was. So yeah, it was definitely a little bit disappointing. But time will tell where we’re at. Some of the modeling I’ve seen for the weather is that we are going to turn a little bit warmer and drier here in the middle part of January, and with this latest crop that has been planted, that could cause some problems to that crop and still shrink it. And of course, we still haven’t started planting safrinha corn crops. So the size of that crop is yet to be determined.”

Quarterly Grain Stocks

USDA’s revisions to the 2023 crop production numbers pushed the quarterly grain stock estimates higher and above trade expectations.

Corn stocks are forecast up 13% to 12.2 billion bushels. Soybeans were adjusted down 1% from December to 3 billion bushels.

Wheat supplies on December 1 were forecast to be up 8% from a year ago at 1.41 billion bushels.

Will Inflation Return in 2024 and What Does It Mean for the Grain Markets?

Wed, 10 Jan 2024 21:16:14 GMT

Speakers at the Water Street Solutions Edge Conference in Tucson, Ariz., say they expect inflation to return in 2024. Not only will it have an impact on the interest rate environment, but it could bring the fund or speculative community back in to buy commodities, which would be positive for the grain markets.

Inflation cooled in 2023 following a series of interest rate hikes by the Fed. However, Arlan Suderman, chief commodities economist for StoneX, says there are already economic signs inflation could rear its ugly head in 2024.

“With interest rates coming down, we’ve seen a resurgence in interest in buying houses once again at lower mortgage rates,” he says. “Those are two sticky areas of inflation that can bring it back.”

Despite the markets pricing in lower interest rates this year, he doesn’t expect the Fed will cut rates, at least in early 2024.

“I believe that means higher for longer from the Federal Reserve, but the Federal Reserve will start to lose its influence on interest rates this year, particularly the longer end of the yield curve, as we see what’s projected to be a 23% increase in debt certificates offered onto the Treasury market because of government spending,” Suderman says.

That means the Fed most likely won’t be able to use interest rate hikes to curb inflation. That could cause the funds to buy commodities as a hedge against inflation, after being in a deflation mode for the last 21 months and short in many markets such as corn and wheat.

Darren Frye, CEO, Water Street Solutions, says: “The Fed has a tendency once they come out of something they go the other way. I think we could have a catalyst to get them flat and then we’d see if there’s something optimistic enough to get them long. But we might find out we have another surge in inflation and that would be bullish to commodities if that happened.”

Suderman adds that could support grain prices. “That doesn’t necessarily mean we get a big rally in prices, bit it does make it easier for the market to respond to any type of a friendly story that comes along,” he explains.

This environment might also pressure the U.S. dollar index, which is friendly for ag exports and prices.

USDA's December Reports Unwrap No Major Surprises, And Analysts Argue Corn Prices Are Stuck For Now

Fri, 08 Dec 2023 21:53:51 GMT

There wasn’t much excitement in Friday’s USDA reports. Despite weather concerns sprouting in Brazil, USDA didn’t make any major adjustments to the South American corn or soybean crop, but USDA did acknowledge the increased appetite for U.S. corn and wheat from China, as well as increased buys of corn from Mexico. Those recent reported sales prompted the agency to make minor cuts to U.S. ending stocks for both corn and wheat. Overall, analysts say it was a typical USDA report for December.

“This is probably the least important report of the 15 reports released during the year, we shouldn’t expect anything big,” says Jon Scheve, president of grain trading for Superior Feed. “I think our focus is now solely on weather in South America for the soybean crop.”

USDA trimmed its estimate for Brazil’s soybean crop, but left Brazil’s corn and Argentina’s corn projections unchanged. USDA’s December report now has the following projections penciled in:

Cut Brazil’s soybean estimate by 2 MMT from the November report to 161 MMT
Left Brazil’s corn production estimate at 129 MMT
Left Argentina’s corn production estimate unchanged at 55 MMT

Scheve thinks USDA’s decision to not make any major adjustments to the South American crop was due to timing.

“Basically from December 20 through January 20, that’ll be the biggest timeframe for South American weather for soybeans. Also, the exports will pick up for U.S. beans during that timeframe. So, if we’re going to see fireworks, it’s going to happen during that time, and especially depends on what the weather is like for that,” Scheve says.

He says the timeframe for possible fireworks in the corn market is even later.

“I don’t see any reason to worry about South American weather for corn until we get to April or May when that second crop goes into reproductive stage. And then maybe we can have fireworks for corn. But until that time, I just look at a farmer who wants to get $5 for corn in the U.S. So that’s going to be trouble for them to sell it. And I think the end users want to buy it at $4.50. So we’re probably stuck in a range somewhere around that $4.75 to $4.80 mark, up or down 20 cents, from there.”

Mike North, president of the producer division for Ever.Ag, agrees that USDA didn’t make any major adjustments due to the time of year.

“It is too early, and when you look at this time of the year, we often don’t make adjustments,” says North. “The fact that they lowered bean production by 2 million metric tons kind of falls in line with some of the boots on the ground analysis. Some are talking about the early weather maybe taking the cream off of the top for yield, especially in northern Brazil. But it really is too early to know. As we saw with our own soybeans this year, it’s way too early in the game to be destroying yield when we’re just getting them in the ground.”

Is the South American weather story a bigger issue for corn or for soybeans? Scheve says when you base it simply on timing, it’s soybeans.

“I think the weather first has to be a story for soybeans because that’s the first one that’s going to be affected. There could be a bit of an argument made that if the bean crop is delayed a little bit from its plantings that possibly that could push plantings back on the second corn crop which would then end up in the May dry season and maybe hurt the yield a little bit, but since their yields are already only 80 bu. per acre across the country in general, I don’t know that it’s going to be a substantial drop,” says Scheve.

The other thing to keep in mind, according to Scheve, is the scope of the growing area in South America.

“It’s a massive area. When you look at from the top of Mato Grosso to the bottom of Argentina, you’re talking about 2000 miles. Compare that to Fargo, North Dakota to Jackson, Mississippi, which is only 1200 miles. So, it’s massively big area, it’s spread out over a much bigger area. And the weather is way different across all of that area,” he says.

USDA Trims Ending Stocks

As Mexico and China ramp up buys of U.S. corn, it prompted USDA to cut its U.S. corn ending stocks estimate by 25 million bushels in the December report. China has also increased its purchases of U.S. wheat, which took 25 million bushels off the wheat balance sheet.

USDA’s updated look at U.S. ending stocks estimate shows:

Corn down 25 million bushels to 2.13 billion bushels.
Soybeans unchanged at 245 million bushels.
Wheat down 25 million bushels to 659 million bushels.

China continues to buy U.S. corn and wheat. USDA confirmed another purchase of soft red winter wheat from China, this sale totaling 4 million bushels. What’s behind the buys? Scheve says it goes back to concerns with their domestic wheat crop.

“I think it’s just a function of that they’ve had some poor quality around the world,” says Scheve. “They’re seeing an opportunity right here. They’ve seen some value on prices, and that’s giving them a quick opportunity to add a little bit into their storage.”

North thinks China is just one of several countries seeing some potential production issues with wheat.

“That short crop in China has what’s it’s definitely been what’s inspired him to come to the market. I think as you look elsewhere in the world, Australia has had some real issues with their wheat crop and downgraded a bunch of their soft red. We’ve got certainly available supplies and growing inventories here in the United States,” says North. “If I look to places like Argentina to try to fill in gaps, everybody’s still scratching their head waiting to see what the new president does with export tax. So, if I’m China, and I know I have a short crop, I’m going to try to get ahead of that. And for the U.S., this is a great opportunity right now, especially with the US dollar coming down 3% here over the last few weeks.”

What’s Next? USDA’s Big January Reports and Potential Fireworks

After USDA’s raised its U.S. corn yield forecast by nearly 2 bu. per acre in the November Crop Production Report , Scheve says the worst-case scenario for corn prices is if USDA increases the yield forecast again in the January reports. Based off conversations he’s having with producers, he thinks an increase in the national yield is a possibility for next month’s report.

“I think best-case scenario is that they don’t change the yield at all in January,” says Scheve. “I think the worst-case scenario is that they add another two to three bushels per acre to the national yield.”

Scheve says based on conversations he’s having with producers, the “better than expected” yield story played out again this fall.

“I’ve talked to people across the entire country, and everyone is absolutely surprised by their yields,” he says. “Most of them are all to the positive. I would say I had less than 10% of clients that were telling me that the yields were worse than they expected, and that was only if they were in kind of a middle of Nebraska to Sioux City area. That was the only area that kind of saw some really bad potential outside of Northeast Iowa.”

USDA’s January reports are scheduled to be released on Friday, January 12, 2024.

Related News:

Grains See Profit Taking Post WASDE with Minor Adjustments: Cattle and Hogs See Relief Rally

Better Yields and Improved Crop Prices Propel Ag Economists' Outlooks for 2024

Wed, 22 Nov 2023 20:26:11 GMT

After two months of a waning outlook on the ag economy, economists’ views took a turn in the November Ag Economists’ Monthly Monitor , a survey of nearly 70 ag economists from across the country.

“The biggest takeaway I see out of the Monthly Monitor this month is we’re seeing a lot more positives than we’ve seen for the last couple of months,” says Scott Brown, the interim director for the Rural and Farm Finance Policy Analysis Center (RaFF) at the University of Missouri, who also helps author the Ag Economists’ Monthly Monitor.

The Ag Economists’ Monthly Monitor is conducted by the University of Missouri and Farm Journal each month, as it’s a way to gauge not only the state of the ag economy but also explore the impacts of policy and trade. Brown says as commodity prices have seen some momentum, outlooks among economists are also shifting more positively for 2024.

“I think when you look at where we are in terms of our estimates for crop prices, and we’re talking about crop prices for harvest next fall at this point, we saw a number of more positive responses, maybe the most positivity since we started our estimates for 2024/2025. As both corn and soybeans continue to move higher, there’s more positive news this month,” Brown adds.

Spike in 2024 Net Farm Income Forecasts

That positivity also boosted net farm income estimates. The November Monthly Monitor asked ag economists to provide their outlook for net farm income in 2024. The survey found ag economists now expect a big spike in net farm income forecasts for the new year.

“Farm income estimates were raised almost $5 billion for 2024, relative to what they would have said in October,” Brown says. “And I think that just resonates as you look at higher estimates of corn prices and higher estimates of soybean prices, things just look a little better than where we were a couple of months ago.”

What’s driving improved outlooks in the farm economy? Economists say commodity prices, including improved yields and harvest picture for some commodities.

Another major factor is South America. When asked what factors will impact crop prices in the next six months, economists say:

South American crop production (including weather impacts on planted acres) and related export sales.
Global dynamics in general, as well as conditions and production in key regions like the Black Sea and China.
U.S. export demand strength and growing crop supplies.
Final U.S. crop size and weather-related impacts.

Weather Worries in South America

The latest USDA report pegged Brazil’s corn production at 129 million metric tons, but according to the Monthly Monitor, that estimate may be too optimistic.

“Our survey of the economist would have suggested 126.5 mmt right now,” Brown says. We did have some answering very near that 129 mmt and others saying 125 mmt. It’s a combination of weather as well as economics, not all that great. That is leading to some lower estimates.”

When asked what’s driving changes in the crop forecasts for Brazil and Argentina? Economists say it’s all about weather, the impacts of El Nino and delayed planting that could eat into the Safrinha corn crop in Brazil. Economists also say Brazil could be looking at fewer soybean acres.

“Uncertain, volatile weather conditions - either too wet or too dry as Brazil transitions from La Nina to El Nino weather patterns,” says one economist when asked what are the factors driving the change in estimates for the Brazilian soybean crop. “Plus, delayed plantings of the 2024 Brazilian Soybean crop with substantial replantings required is hurting production potential.”

Bullish Views on Cattle Continue

While views on crop prices turned more positive in the latest Monthly Monitor, economists are still bullish longer-term on cattle.

“I think folks are more positive still on the cattle side of the equation, despite what’s been the last few weeks of some lower cattle prices,” Brown says. “We are talking about an industry that continues to talk about record or near record, and perhaps in early 2024, we get back to record prices yet again.”

The outlook for pork prices, as well as dairy, continued to see some pressure, but overall, the factors economists think will impact livestock prices over the next six months include:

Weaker demand domestically and globally.
Global economic health, including slowdown/recession in some geographies.

Health of the Farm Economy by Geography

This month’s survey also asked ag economists to rank the health of the farm economy by geography. The strongest region of the country, according to economists survey, is the Midwest.

“I think we ended up with especially better corn yields than anybody would have thought. Maybe soybean yields are not even as bad as some would have suggested. And then again, cattle still being very positive there, Brown says.

According to economists surveyed, there were a multitude of factors that played into how they ranked each geography, including:

Drought and weather
Government policy impacts upon state and metropolitan economic health.
Commodity /crop mix

“Certainly, crop and livestock mix is important,” says one economist in the anonymous survey. “While corn prices are lower the combination of yields and prices were likely profitable for many. But lower prices have come on the heels of very high prices in the last couple of years. Hog and dairy returns are dragging down financial health in the sector regionally. Cattle prices are boosting overall returns in the Plains. But drought has certainly hurt ranchers, including water in the West.

Impact of Interest Rates (Both Positive and Negative)

Economists are still concerned about how interest rates could negatively impact agriculture over the next 12 months, but for the first time, economists now view it as a possible positive over the next year.

When asked, “What do you view as the most negative aspect regarding the outlook of U.S. agriculture?”, the Monthly Monitor shows:

High interest rates, market volatility and a shortage of working capital create a challenging economic climate.
Production challenges range from weather conditions to commodity prices and policy support.
A need for investment into increasing domestic and demand for U.S. products.

When followed up with, what do you view as the most positive aspect regarding the outlook of U.S. agriculture, economists say:

Economic resiliency of the farm operator, including strong financial positions for some operators and farm income forecasts remaining above the long-term average. Some optimism for stabilizing interest rates.
Promising new demand opportunities, including the expansion of biofuel uses, as well as continued consumer demand.
Improvements in technology and the possibility of better production in 2024.

“The news that we seem to be getting right now is, although inflation is still a problem, maybe less so than we would have thought. So perhaps we’re getting near the end of interest rate increases, I even see some out there suggesting we could get lower interest rates as we get into 2024,” Brown says.

Outlook for Crop Mix in 2024

Economists were also asked to shift their focus to 2024. Economists say the most important factors that could affect 2024 crop plantings/acres in the U.S. are:

Spring 2024 weather conditions and drought concerns.
Corn-soybean price ratio affecting decisions, as well as planting prospects for corn/soybeans/cotton and wheat profitability.
Changes in output prices, higher input costs, crop insurance price levels and 2024 futures prices affecting planting decisions.
South American crop production and demand (domestically and globally) impacting prices.

An Important Wildcard In The 2024 Grain Storage Outlook

Tue, 14 Nov 2023 22:15:21 GMT

U.S. grain elevators see potential for big profits in the 2023/2024 marketing year.

According to a recent report from CoBank, an abundance of corn and soybeans has resulted in cheaper basis and bigger carries in futures markets. This follows two years of inverted futures markets.Despite improved conditions for the elevators, there’s a big obstacle standing in the way of their profit potential.

“Many grain farmers have the benefit of being in a very strong cash position following last year’s record farm income levels. They have been quite content to hold on to their grain since prices have fallen,” says Tanner Ehmke, CoBank grains and oilseeds economist.

Lack of Grain Ownership at Elevators
Farmers’ reluctance to sell has resulted in lower levels of grain ownership for elevators and many are currently unable to take advantage of the wider carries and basis levels.

As a result, many elevators are charging higher storage fees and implementing delayed pricing (DP) programs. These programs have become popular as farmers wait for a rally in prices. However, Ehmke encourages elevators to use caution around them.

“Trading DP bushels comes with challenges,” he says. “Although the elevator technically owns these bushels, shipping unpriced bushels is risky since basis could tighten on DP bushels that are already sold – resulting in a loss if the elevator did not sufficiently charge for the service.”

He advises those using DP to acquire corn and soybeans now should make sure their monthly rates are adequately priced to account for the greater financial risk of selling bushels not yet priced by the grower.

Storage Outlook
This scenario, however, is not anticipated to be long term.

“Higher land rents and borrowing costs, combined with rising prices for inputs like fertilizer, will probably motivate farmers to sell as the calendar turns to 2024,” he says.

CoBank anticipates farmers will likely begin selling their crops in January, February and March ahead of spring planting and upcoming operational expenses and/or when prices reach $5/bu. for corn and $14/bu. for soybeans.

The Wildcard
When it comes to basis, any rise is expected to be limited by the large supply of corn and soybeans. At the same time, cheaper transportation rates, strong end-user demand among livestock producers, ethanol plants and soybean crushers should protect it from a significant drop.

Soybean basis in particular is strong due to a smaller U.S. soybean harvest and record processor demand.

The significant unknown, however, revolves around exports.

“The biggest wildcard that could affect the carry in basis is the U.S. corn and soybean export program, which could be awakened by a poor South American harvest, a surprise resurgence of Chinese demand, a return to more normal water levels on the Mississippi River, and weakness in the U.S. dollar,” Ehmke says.

A poor South American crop could mean a tighter basis and narrower spreads in futures – which would look similar to the past two years. A larger crop, however, would likely result in a widening of carries in basis for elevators.

El Nino's Effect on Crop Prices

Tue, 14 Nov 2023 15:00:00 GMT

A rebound in South American crops has been anticipated by traders for a long time. The focus for months has been the “big” crop coming in the southern hemisphere and the competition U.S. soybean farmers could suffer.

Recent WASDE reports had assumed another record Brazilian soybean crop and Argentina returning to normal, but the El Niño weather pattern might have something to say about that.

El Niño causes the waters of the Pacific Ocean to warm and normally has an impact on the world’s climate. In Brazil, it usually brings a drier climate in the north and northeast and rain in the south. The effect in Argentina is a wetter year beginning with a wet spring (Sept. to Nov.)

The table below reflects the potential for an increase of 31 million metric tons (mmt) or about 1.2 billion bushels. WASDE has recognized the importance of the U.S. losing exports to a whopper crop by lowering U.S. exports this year to 1.76 billion bushels. This is compared to the past three years of exports at 2.26, 2.16 and 1.99, respectively.

Yet when supplies from all sources are put into WASDE’s global supply and demand tables, U.S. carryout is seen as 245 million bushels or about 6.5 mmt. The importance of El Niño becomes apparent.

Change in Perspective
Total 2023/24 production in Brazil and Argentina is seen at about 211 mmt. The U.S. carryover of 6.5 is only 3% of that total. If Brazil would have an El Niño production comparable to last year’s record, the 7 mmt shortfall would offset the U.S. total carryover. Suddenly, the perspective changes.

Sources in Brazil say crop potential has already been reduced by 2 mmt to 3 mmt. Further implications for replant and delayed planting suggest supplies out of Brazil will, at a minimum, be delayed.

As a result, this delays the country’s safrinha corn planting and affects their yield by 2 mmt to 3 mmt as well. Reductions due to too wet and too dry conditions is yet to be determined but is currently on the radar of global traders.

Market psychology is a big part of price discovery on a day-to-day basis. Price adjustments come quick and pronounced as well. While corn and wheat gave back all their gains realized in the two-year bull market, soybeans managed to lose only 50%.

The reason is there are only two producers who share nearly 100% of exportable supplies. For corn, there are four: the U.S., Argentina, The European Union (EU) and Ukraine. There are seven major producers of wheat: the U.S., Canada, Ukraine, Russia, EU, Australia and Argentina with India as a smaller exporter.

Generally, when a major exporter has a problem with exportable supplies, other players make up the difference. Everyone grows some wheat, but most must import some. With two big exporters of soybeans, the implications are huge, and a reduction in exportable supplies by one can significantly affect price.

Market perception (psychology) can be under appreciated when it comes to price discovery.

‘Reckless Spending’ is Putting U.S. Fiscal Health at Risk, Analyst Says

Mon, 07 Aug 2023 16:38:42 GMT

Market analyst Bob Elliott, co-founder and CEO of Unlimited Funds, addressed a less than rosy fiscal outlook for the U.S. with AgriTalk Host Chip Flory on Thursday.

Elliott told Flory the U.S. government balance sheet and financial condition have been deteriorating significantly over the last decade.

“Finally, they’re waking up to that fact, and I don’t think anyone in the markets is really looking at what they have to say,” Elliott said.

“It’s creating a renewed focus on the unsustainable path of the fiscal situation of the United States. And that, I think, is in part what is driving some of the market action we’ve seen in the last couple of days related to the bond market,” he added.

Flory told Elliott one of his concerns is that market analysts are predicting fiscal deterioration over the next three years, which will be concerning to “average” consumers who invest in the stock market and other entities.

“What’s going on?” Flory asked.

Elliott explained that the U.S. government typically borrows more in economic contractions. “It’s called counter cyclical,” he said.

However, the U.S. is in so much debt today that his concern is there will be no financial room to borrow more money if a recession – like the Great Recession in the mid-2000s – occurs again.

Elliott said one notable difference between today and 15 years ago is that the unemployment rate today is at secular lows. “The economy just put up a two and a half percent GDP growth number. You know the economy, while it may not be perfect, it’s doing pretty well,” he said.

Potential For Government Shutdown?
Congress has to pass 12 appropriation bills before the end of this fiscal year, and the clock is ticking. Flory said he’s concerned.

“They got one done, and then they left for August recess. Assuming Congress is going to get 11 more appropriation bills done by the end of September is exceedingly hopeful,” he said. “That’s going to raise the potential for a government shutdown, isn’t it?”

It looks very possible, Elliott said. “There’s some risk, but odds are there will be some last-minute agreement that pushes the issue out into the future,” he said. “Look, we’ve been down this path before and the government shutdown is a real possibility, and I think we’ll just add further focus on the fiscal unsustainability of the U.S.,” he added.

“Congress acts like the country can just go on spending,” Flory said. “Why it that?” he asked.

“They haven’t faced the consequences of spending so recklessly in a good economy,” Elliott said.

He predicted the U.S. consumer will continue to see a rise in interest rates and then “real-world” effects on households and businesses that are faced with borrowing money at those higher rates.

“And that will start to weaken the economy,” Elliott noted. “Too much fiscal stimulation creates rising interest rates, which creates a challenge for businesses and households. And eventually, people will come to realize, you know, that isn’t necessarily a good and acceptable path for their legislators to pursue.”

The conversation on AgriTalk is available here:

Farmers Seize Market Opportunities but Concerned about Rising Interest Rates

Thu, 03 Aug 2023 14:01:07 GMT

Farmer optimism inched slightly higher in July, according to the latest Ag Economy Barometer from Purdue University and the CME group, released August 1.

“It’s just a couple of points higher compared to June, but it’s up about 20 points compared to this same time last year,” says Jim Mintert, director, Center for Commercial Agriculture, Purdue University and co-creater of the barometer.

Farmers’ rating of financial conditions on their farms was virtually unchanged in July, compared to June, as the Farm Financial Conditions Index rose just one point to 87 versus a reading of 86 in June.

Looking back to May, however, Mintert says the percentage of producers rating their farm’s financial performance as better than last year improved from 14% to 17%, while those rating financial performance as worse than a year ago fell from 38% to 30% of respondents.

July Rains Helped

Part of what’s at play in Chip Flory’s opinion is farmers are feeling better about their personal yield prospects, given some rains in July, and are seizing market opportunities.

“I think that’s probably got a lot to do with this and just the simple fact that these markets have given some opportunities,” says Flory, a market analyst and host of AgriTalk. “It sounds to me that more and more producers have taken advantage of the markets that were given to them and increased their new crop markets.”

Farmers managed to navigate the market volatility last month, Mintert adds. “That was one of the things that led me to be a little bit surprised. I thought perhaps we’d see some negative things show up, just relative to the fact that these markets have been so volatile as that can create some stress,” he told Flory. “But it was really an interesting survey in terms of people felt a little bit better about their farm’s financial performance. They feel little bit better about making large capital investments. So really some cautious improvement there.”

Concerns About Interest Rates Mount

Mintert says the rising interest rates are increasingly a concern for farmers. The concern was most apparent when farmers were asked about making large capital investments replied that now is a bad time to make that decision.

Last summer, between 14% and 18% of the people in the survey told Mintert and his team that rising interest rates were a primary reason for it being a bad time to make large investments. That sentiment has only grown. Now, almost 40% of farmers surveyed chose rising interest rates as the biggest reason why they thought it was a bad time to be make large investments.

“And we have two thirds of farmers – 65% of people in the survey this month – who expect interest rates to go up over the course of the next year,” Mintert says.

Land Cash Rental Rates Outlook

One thing most farmers surveyed don’t expect to go up are land rental rates. Nearly one-fourth of corn/soybean producers expect farmland cash rental rates to rise in 2024 compared to 2023. Seven out of 10 producers look for no change in 2024’s rental rates.

The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from July 10-14, 2023.

Listen to the full discussion between Flory and Mintert here:

2023 Corn and Soybean Market Outlook: Bulls Versus Bears

Thu, 02 Feb 2023 23:21:22 GMT

By Sara Schafer and Clinton Griffiths

Corn and soybean prices hit 10-year highs in 2022, creating exceptional returns to row crop producers. Will 2023 be a repeat or will prices shift lower? Stephen Nicholson, global analyst for grains and oilseeds at Rabobank; Dan Basse, president of AgResource Company; and Ben Brown, agricultural economist at the University of Missouri, dive into some of the bullish and bearish factors at play for the year.

Corn

BULLISH FACTORS

Ethanol production (and demand for corn) has remained relatively stable, even after a slow demand period through summer 2022.
Corn supplies for 2022/23 supplies are down 6% while total demand is projected to be down 5.7%. As a result, Nicholson says, in 2022/23 the ongoing tight stock situation will be supportive to prices.

BEARISH FACTORS

U.S. corn exports for 2022/23 are 30% below last year’s pace. But, the key is timing, Nicholson says: “This is not our strong export time for corn; that time is coming in the next several months. Let’s not dig the grave and bury the corn market now because of these low exports.”

Corn acres in the U.S. will likely top recent years, Brown says. “We will see an increase in corn acres in 2023, which is not something I would have said six months ago,” he says. “But the price premiums for other crops have eased.” In addition, Brazilian farmers will likely expand their safrinha (second crop) corn acres. Since their Brazilian soybean crop was planted in a timely fashion, the safrinha corn crop can follow suit.

WILD CARD

Market analysts say the U.S. beef cowherd in 2023 could fall to the smallest number since 2014. That will reduce feed demand but maybe not in a major way, says Brown: “I’m expecting just a little feed demand destruction as the U.S. is really low on forage supplies in key areas, so demand for feed grains will stay relatively stable.”

Soybeans

BULLISH FACTORS

Similar to corn, U.S. soybean stocks are tight, which will likely continue to support prices.
Renewable diesel and sustainable aviation fuel are key demand drivers for soybeans, as domestic soybean processing capacity expands. To date, announcements have been made for 23 plant expansions, which would add 750 million bushels per year in crush capacity, according to Scott Gerlt, American Soybean Association chief economist. The announced 23 new or expanded crush plants would increase crush capacity by 34%.

“Never before have we had 23 new or upgraded crush facilities occurring at the same time, so, there’s bullish-ness in the background of this market,” Basse says.

Traditionally the U.S. soybean market has been focused on exports, primarily to China, but the growth in U.S. crush soybean facilities will change that philosophy and market infrastructure, Nicholson says.

“The domestic market will become as important or more important than exports,” he says. “Product demand seems insatiable, but we don’t have all the domestic infrastructure for soybeans, and we’ll have a surplus of soybean meal. What do you do with all that meal? This will all unfold in the next three or four years.”

BEARISH FACTORS

Brazilian soybean acreage is expected to grow 3.5%, to 105 million acres this crop year, according to CONAB. It would be the first time the planted area will exceed 100 million acres. In addition, other South American countries are also increasing acres. Even with dry weather in Argentina, Nicholson says a record could be on tap.
Keep an eye on Ukraine’s soybean production, adds Brown: “The expectation is they will focus on soybean production versus corn because it is a lower input cost.”

Read More: Soybean Harvest Is Just Beginning in Brazil. Here’s What the Crop Looks Like

WILD CARD

U.S. exports of soybeans to China are down, Nicholson says, but signals are mixed on the big-picture impact. “Soy-bean export inspections are running 9.5% behind last year, while outstanding sales are up 28.6% versus a year ago, second-highest on record,” he says. “Therefore, exports may end the year on a high note.”

CATTLE MARKET FACTORS
The beef cow culling rate in 2022 was record high at 13%. Beef cow slaughter was 12% higher than 2021, which was 9% higher than 2020. John Nalivka, president of Sterling Marketing, projects U.S. cattle inventory early this year to be 89.08 million head, a decline of 3%. He estimates the number of feeder cattle outside of feedlots to decline 4% (or 1 million head) in 2023 versus 2022.

Despite tightening supplies, feedyard inventories have remained near capacity in the past three years. That will change with inventories expected to drop this year. Fewer cattle on feed will lead to a beef production drop. “Beef production will decline in 2023, but the magnitude is uncertain,” says Derrell Peel, Oklahoma State University livestock economist. “The smallest decline is expected in the range of 3% to 4%, but it could be as much as 7% to 8%. The difference will depend on cattle slaughter, which in turn, will depend on drought conditions.” ~Greg Henderson

Read More

2023 Grain Markets: 8 Analysts Share Price Direction and Market Strategies

Jerry Gulke: Soybean History Lesson Provides Clues to Future Price Direction

5 Tips to Create A 2023 Grain Marketing Game Plan

Where Did China's Population Go, And What Does It Mean For China's Historically Strong Export Demand?

Fri, 20 Jan 2023 14:54:42 GMT

Estimating the reality of China’s population , demand and other economic figures seems to be a growing challenge for economists across the globe. This week, China threw out a bit of a surprise , acknowledging the country’s population is declining. Officials in China say the population now sits at 1.4 billion.

While analysts say China is at least acknowledging the population problem, some estimates point to China’s population dwindling from 1 billion by 2050 to 494 million by 2100.The issue is China’s one-child policy, a practice which ended in 2016.

Just last week, China’s government said nearly 60,000 people have died after contracting COVID-19 since abandoning its zero-COVID policy on Dec. 7, 2022.

Is the population decline acknowledgement going far enough? And does it have a direct correlation in the drop in Chinese demand for U.S. agricultural products? It’s a question economists could debate for years.

“The demand from China certainly is a problem,” says John Payne of hEDGEpoint Global Markets . “I don’t know if demographics in China are correct. The reports we get out of there you have to take with a grain of salt. So, this week, to see them finally admit to that, you just wonder if that’s baked in the cake or not.”

As reported on AgWeb, every day, China must feed 20% of the global population. With so many people, it makes China a demand powerhouse, and today, China is not only the world’s biggest consumer of agriculture goods, but according to AgWeb, it is the biggest in history. And China’s lack of demand from the U.S. this marketing year is what’s alarming to Jim McCormick of AgMarket.net today.

“Right now, the biggest demand concern is China,” says McCormick of AgMarket.net . “I mean, there’s a lot of trade anticipating China will eventually come to our market and start buying corn. But the reality is they haven’t. They’ve been buying a lot of corn from Brazil, at this point in time.”

Did the Yield Drops in USDA's Reports Put a Floor Under Grain Prices?

Wed, 12 Oct 2022 19:32:21 GMT

The U.S. corn and soybean crops keep getting smaller. Production for both crops is down from September 2022, according to the Crop Production report issued Oct. 12 by USDA’s National Agricultural Statistics Service.

Corn yields are expected to average 171.9 bu. per harvested acre, down 0.6 bu. from the previous forecast and down 4.8 bu. from 2021. Area harvested for grain is forecast at 80.8 million acres, unchanged from the previous forecast. As a result, corn production is down 8% from 2021, forecast at 13.9 billion bushels.

For soybeans, yields are expected to average 49.8 bu. per acre, down 0.7 bu. from the previous forecast and down 1.9 bu. from 2021. Area harvested for beans in the U.S. is forecast at 86.6 million acres, unchanged from the previous forecast but up slightly from 2021. This means soybean production is forecast at 4.31 billion bushels, down 3% from last year.

“The USDA report was certainly NOT bearish with the drop in yield estimates for both corn and beans,” says Jon Scheve , president of grain for Superior Feed Ingredients. “Historically speaking, when USDA has dropped the yield estimate in September and October, there is better than a 60% chance they will drop the yield again in the January report.”

As a result, Scheve says, this report likely put a floor under prices the balance of the calendar year.

While analysts ahead of the report were expecting a drop in corn yield, the soybean yield decline was not expected, says Bill Biedermann, AgMarket.Net co-founder, and the market responded quickly.

“That was a surprise that created a supply drop by 65 million bushels,” he says. “However, it did offset the more soybean stocks USDA found in the last quarterly grain stocks report. So, it was a net loss of 30 million bushels.”

USDA lowered demand and left soybean ending stocks unchanged.

“That means we don’t have a plentiful supply,” Biedermann says. “That’s only a 4.5 stocks-to-use ratio, which is only 16 days’ worth of supply. So even though it was a bearish demand revision, it’s still a very tight situation.”

This is the tightest stocks-to-use ratio for soybeans since 2013, Scheve adds.

“Following the harvest in 2013, beans saw a dramatic rally in futures in the winter,” he says.

Will Corn Prices Rally This Winter?

For corn, USDA lowered exports by 125 million bushels and lowered ethanol use by 50 million bushels. However, USDA increased feed and residual use by 50 million bushels. With supply falling more than use, corn ending stocks for 2022/23 are cut 47 million bushels.

For USDA to drop corn ending stocks below 1.2 billion bushels, which they established as the pipeline requirement in 2022, is quite a statement, Biedermann says.

“We’re down to an 8.2% stocks-to-use ratio, which is only a 30-day supply of corn on hand,” he says. “So, if we don’t see further cuts in demand, or revision upward in yield, this market is going to be extremely buoyant if there’s any kind of a problem in South America.”

Scheve says the current stocks-to-use ratio for corn is equal to the 2020 crop year.

“That was when the market had one of the best post-harvest rallies of all time,” he says.

Future Grain Price Drivers

The market will now start focusing intensely on South American weather, Scheve says.

“The world stocks are still tight and there is a real need for good production levels to be attained to push prices lower,” he says. “With the threat of La Nina present until after the new year, it leaves the South American crop with elevated chances of reduced yield and higher prices.”

Obviously, Scheve adds, demand destruction could still hurt a post-harvest rally for either crop and the Mississippi River’s low water levels will continue to be monitored to see what effects it could have on export pace.

The next 30 days will be important for the grain markets, Biedermann adds.

“I think USDA is trying to figure out how to balance the books and not cause fear and panic in the marketplace and on either side of it,” he says. “They’re shooting right down the middle, which they should do until they see more statistics on how we come out. We need more yield data coming in, and we need to see how this economic macro picture and how the river system picture looks 30 days from now.”

JUST IN: ADM sets record for single soybean shipment from northern Brazil

Thu, 22 Sep 2022 02:43:03 GMT

By Nayara Figueiredo

SAO PAULO, Feb 22 (Reuters) - U.S. grains merchant Archer-Daniels-Midland Co said on Tuesday it has carried out the largest soybean shipment in the history of the Ponta da Montanha Grain Terminal (TGPM), located in the northern Brazilian city of Barcarena, as it shipped 84,802 tonnes in a single vessel.

It also represented the largest volume ever shipped on a grain vessel from ports located in the Amazon Basin, the company told Reuters.

“This showed us that we have one more option to move soybeans through the TGPM, using our own vessel... This is definitely something we will do again more often”, ADM’s South America Logistics Director, Vitor Vinuesa, said in a statement.

ADM-owned bulk carrier MV Harvest Frost, which is 237 meters (777.56 ft) long and 40 meters wide, set sail last week for the port of Rotterdam in the Netherlands, where the company also owns a terminal. The company said all the soybeans moved will be crushed by ADM itself, obtaining products such as soymeal, cooking oil and biodiesel.

The previous record for shipments from Brazil’s northern region was set at the port of Santarem in 2020, when 82,531 tonnes of soybean were moved in a single vessel.

(Reporting by Nayara Figueiredo; Writing by Gabriel Araujo; Editing by Bernadette Baum)

Anticipation Is High Ahead Of Pro Farmer Crop Tour, Analysts Caution It Could Be A Big Market Mover

Thu, 22 Sep 2022 02:42:54 GMT

The commodity markets started and ended the week under pressure. A week ago, USDA’s August crop production estimates pointed to a smaller corn crop, but that yield reduction didn’t seem to matter to the markets this week.

Arlan Suderman of StoneX Group says immediately following the report release a week ago, the initial reaction from the algo computers was bearish, as he says those trades are only reaction to what they’ve been programmed.

“That tells me the funds programming those algos had expectations that we’re going to see USDA slash the yields for corn and soybeans, and they were disappointed USDA did not,” he says. “So they sold off those markets hard, then the human element brought those markets back. That was encouraging.”

Suderman says even though USDA didn’t make a large adjustment to soybeans, it’s too early to know where yields could land.

“Are there problem areas? Yes. Are there some really good areas? Yes, I really can’t argue with a trend yield for Aug. 1, because that possibility is still there,” Suderman says .

Suderman says USDA’s decision to trim the national corn yield to 175.4 bu. per acre is something he thinks will be trimmed even more in the months ahead.

“Corn maturation was sped up more by the heat we had this summer, and that tends to lead to smaller kernels, although we’ve cooled down since then,” he says. “But we still have a lot of areas that are dry,” he says. “I think we’re going to see those yields drop down to low 170s. Maybe even more than that. But we’ll learn a lot next week about crop health across the Midwest.”

What the Markets Are Watching

Kristy Van Ahn-Kjeseth of Van Ahn and Company says next week’s Pro Farmer Crop Tour could reveal a lot about this year’s crop potential, especially considering areas of the upper Midwest have seen conditions dry out recently.

“Iowa did get some great rains, some slow, perfect rains the other day, but there’s a lot that needs to come for those other areas and we have a crack at it over the next five days,” she says. “That’s going to be the biggest question. Do we actually see that happen?”

Do USDA’s Yield Projections Stack Up

Suderman says he’s also watching Pro Farmer Crop Tour closely next week, as he wants to see if the scouts discover the same reports he’s hearing anecdotally.

“This Crop Tours is our first opportunity to see how widespread the good is versus how widespread the bad is,” he says, “and to really get a feel for not only ear health on the corn, but how long are the ears? What’s the girth of the ears? How widespread are the tip back problems we’ve been hearing about?”

He’s also keeping a close eye on pod counts. There are reports of shorter beans across the country, but sometimes short soybeans can produce strong pod counts.

Suderman says the 2022 Pro Farmer Crop Tour has the potential to be an even bigger market mover than normal.

“I think there’s a lot of potential energy in this market, so we’ll be looking to see if the Tour does reveal anything that would give the funds that reason to jump back into this market after they’ve liquidated a lot of their positions,” he says. “If it doesn’t, then it comes down to harvest data. But that opportunity is certainly there for it to be a big market mover.”

Van Ahn-Kjeseth says USDA has been aggressive on adjusting the corn yield lower, so next week’s Tour will give some insight into if those cuts are justified.

Follow complete coverage of the 2022 Pro Farmer Crop Tour .

Brazil’s Drought: The Trigger that Could Take Corn Prices Higher?

Thu, 28 Apr 2022 18:44:44 GMT

This year, USDA is calling for record corn production from Brazil. For 2021/22, the country’s corn crop is predicted to hit 116 million metric tons (mmt), which is larger than last year’s crop by 33%. Corn yields are estimated at 5.50 tons per hectare, 26% above last year’s mediocre crop and 5% above the five-year average.

Brazil grows three rounds of cor n each year. The Safrinha crop, which accounts for 76% of total corn production in Brazil, is in its vegetative state and will be harvested between May and August.

That growing crop is facing severe drought conditions, according to the latest Root Zone Soil Moisture Drought Indicator map from NASA’s GRACE mission.

“Drought has emerged across parts of the Safrinha corn crop in Brazil,” reports Eric Snodgrass, principal atmospheric scientist for Nutrien Ag. “The end of the South American monsoon has come earlier than average this year due to a surging La Niña. The drier finish on the Safrinha crops will limit their yield potential – especially for late-planted corn.”

Mato Grosso, Brazil’s top Safrinha corn producer, is facing its driest April in 17 years, according to weather service EarthDaily Agro. Accumulated April rainfall for the state is expected to be 70% below the 10-year average. Neighboring Goias is expected to have an 85% reduction in April rainfall.

“This is a big deal, and it is not being talked about nearly enough,” says Joe Vaclavik , president of Standard Grain. “Most of the focus right now for the corn market is on the U.S. weather situation and planting delays, but this is a big deal. Common logic says it’s too early to get worried about U.S. planting delays, but maybe in a tight situation like this maybe that’s a warranted argument.”

Vaclavik expects Brazilian corn crop estimates to start declining soon, maybe even ahead of the May 12 World Agricultural Supply and Demand Estimates.

What does Brazil’s drought mean for corn prices?

Kevin McNew, chief economist at Farmers Business Network, says the long-lasting and widespread dryness in Brazil is reason for concern.

“You’ve got about 30% to 40% of the crop that’s got some level of stress on it,” he says. “There’s not any sort of significant rainfall in the forecast in the next 10 days. If we don’t start to see some rain that could be our catalyst for another leg up.”

Brazil is the third-largest corn producer in the world (following No. 1 U.S. and No. 2 China). McNew says the Brazilian corn crop is the main global supplier between now and the U.S. harvest this fall.

“So, it is all the world’s got to draw from,” he says. “That may be the catalyst that gets us to what I know a lot of farmers think starts with one and has two digits before the decimal.”

Listen to McNew discuss the current markets with Chip Flory on AgriTalk:

Read More

Grain Prices ‘Well-Supported’ for Next Three Years, says RaboResearch Economist

Jerry Gulke: When do Market Signals Show “High Prices” Are High Enough?

Market Surprise: Lower-Than-Expected Planted Acres Send Prices Higher

Tue, 13 Jul 2021 20:35:33 GMT

USDA’s June 30 Acreage report is known to offer a few surprises, and the 2021 edition delivered.

For 2021, USDA estimates:

Corn: 92.7 million acres, up 2% or 1.87 million acres from 2020.
Soybeans: 87.6 million acres, up 5% from 2020.
All Wheat: 46.7 million acres, up 5% from 2020.
All Cotton: 11.7 million acres, down 3% from 2020.

Ahead of the report, analysts surveyed by Reuters expected corn plantings to rise notably from March intentions to around 93.787 million acres with soybean plantings climbing to 88.955 million acres. Wheat plantings were expected around 45.940 million acres. Cotton plantings were expected at 11.856 million acres.

“Everyone was surprised in March at low acreage estimates, and now they are surprised again,” says Jarod Creed, owner of JC Marketing Services. “Expectations were that total acres would be 183 million or lower, and we did not get there.”

Total corn and soybean acres sit at 180.3 million, per USDA’s latest update.

For Grain Stocks , USDA estimates:

Corn stocks in all positions on June 1, 2021 totaled 4.11 billion bushels, down 18% from June 1, 2020. Of the total stocks, 1.74 billion bushels are stored on farms, down 39% from a year earlier. Off-farm stocks, at 2.37 billion bushels, are up 11% from a year ago. The March - May 2021 indicated disappearance is 3.58 billion bushels, compared with 2.95 billion bushels during the same period last year.
Soybeans stored in all positions on June 1, 2021 totaled 767 million bushels, down 44% from June 1, 2020. On-farm stocks totaled 220 million bushels, down 65% from a year ago. Off-farm stocks, at 547 million bushels, are down 27% from a year ago. Indicated disappearance for the March - May 2021 quarter totaled 795 million bushels, down 9% from the same period a year earlier.
Old crop all wheat stored in all positions on June 1, 2021 totaled 844 million bushels, down 18% from a year ago. On-farm stocks are estimated at 142 million bushels, down 38% from last year. Off-farm stocks, at 702 million bushels, are down 12% from a year ago. The March - May 2021 indicated disappearance is 467 million bushels, up 21% from the same period a year earlier.

Ahead of the report, analysts expected corn, soybeans and wheat stocks to all tighten dramatically.

Following the reports’ release, corn, soybean and wheat prices all surged higher.

Creed says the markets will now be focused on weather.

“With lower acres, the weather will have a greater emphasis,” he says. “In the last few days, forecasts have become a little more favorable for crop production than 48 hours ago.”

Even with the surge in prices, Creed suggests sticking to your grain marketing plan.

“As of June 30, there is no data to suggest that a marketing plan from one month ago should be any different than today,” he says.

Check the latest market prices in AgWeb’s Commodity Markets Center .

U.S. Corn Shipments to China Due for a Pickup in Pace -Braun

Wed, 17 Mar 2021 20:16:53 GMT

The opinions expressed here are those of the author, a columnist for Reuters.

By Karen Braun

FORT COLLINS, Colo., March 15 (Reuters) - Since last year, China has been importing record volumes of U.S. corn due to a supply shortage and record domestic prices. But U.S. shipments to the Asian country have been slightly disappointing in recent weeks, especially following the standout sales streak at the end of January.

Total U.S. corn exports have not been dragging, though. Data from the U.S. Department of Agriculture on Monday showed that 2.2 million tonnes of corn were inspected for export in the week ended March 11, the second highest for any week on record.

That is only the fourth time since 1983 and the second time this marketing year that weekly U.S. corn inspections, a proxy for exports, topped 2 million tonnes. (https://tmsnrt.rs/3vreugn)

But only 16% of last week’s corn inspections were destined for China, consistent with the previous three-week average. That is despite China accounting for 36% of all outstanding, unshipped sales as of early March.

China’s share of unshipped sales had dropped as low as 20% in January, but Chinese buyers claimed 5.86 million tonnes of U.S. corn in the final week of that month. Since then, shipments have not reflected that sales surge.

In fact, recent U.S. corn exports to China have been a bit lighter than in December and early January, meaning the volumes of U.S. corn arriving at Chinese ports will drift lower in the coming weeks.

As of March 4, USDA data suggested that of the 18.7 million tonnes of U.S. corn China had purchased for 2020-21, some 11.3 million tonnes still needed shipment before the season ends on Aug. 31. Nearly 360,000 tonnes of corn were inspected for shipment to China in the following week.

United States’ typical corn customers, Japan and Mexico, are also waiting for a historically large share of the grain they have already purchased, further supporting the continuation of strong exports. About 52% and 53% of respective sales to Japan and Mexico had been shipped as of March 4, though something closer to 60% and 57% are more normal for the date.

Japan and Mexico typically account for about half of annual U.S. corn exports, but they occupy only 35% of current sales due to the unusually large portion devoted to China (32%). Sales to both of those countries are above average for the date.

U.S. exporters had their best March in 2017 with 6.7 million tonnes. Through the first third of this month, exports are likely more than 30% higher than in the comparable period four years ago, meaning March is on pace for a remarkable total.

The all-time high for any month came in May 2018, when the United States shipped 7.75 million tonnes of corn on its way to a record 2017-18 season.

MORE SALES?

USDA last week left 2020-21 exports unchanged at 2.6 billion bushels (66 million tonnes), some 6.6% above the 2017-18 total. Some market participants are still looking for a larger number, and that could particularly be the case if Brazil’s second corn crop comes up short after being planted so late.

Both Brazil and Argentina’s 2018 harvests were poor, which is why so much international corn demand shifted to the United States early that year. Corn export sales were unusually elevated in February and March of 2018.

But U.S. corn sales have been downright lousy in the past couple weeks, falling well below typical levels and raising some doubts over whether USDA’s export target should rise.

Brazil’s 2016 second corn harvest was among its worst on record due to excessive dryness, and U.S. corn sales were exceptionally strong from late April to mid-June. This could suggest that panic buying by importers over losses in Brazil might be a month away yet, if that were to materialize.

As of March 4, U.S. corn export sales for 2020-21 totaled 59.5 million tonnes, some 90% of USDA’s target, well ahead of the recent average of 71%.

Record Chinese Demand Drives Markets

Tue, 02 Mar 2021 14:28:48 GMT

Understand the fundamentals at play for prices

China is hungry for U.S. corn. From September 2020 to December 2020, China imported 4.9 million metric tonnes of U.S. corn. That’s an 8,000% increase from September 2019 to December 2019.

These big buys are coming at a time when U.S. corn prices have increased around 60% since August 2020. What’s behind all the buys?

“The hog herd is recovering from African Swine Fever,” says Ryan LeGrand, CEO of U.S. Grains Council. “They’re no longer feeding spent food waste, which was allowed before. That’s a big source of demand. And while their herd was decimated, they were putting in poultry production, some beef and even a little mutton. So those three areas combined are really driving that demand in China.”

Even with higher-priced corn and shipping costs, it still pays for China to import U.S. grain, says Arlan Suderman, chief commodities economist with StoneX Group.

“With current U.S. corn prices, freight costs and basic tariffs, China can import U.S. corn for $9 per bushel,” he says. “Inland China corn prices are $11 to $12 per bushel.”

U.S. commodities such as corn are on pace to dramatically improve over recent years and perhaps see the best export year yet.

“If you go back to 2016 and 2017, we were exporting about $20 billion to $23 billion in ag products to China every year,” says Brian Kuehl, co-executive director of Farmers for Free Trade. “Then we had the trade wars start, and that dropped down to about $9 billion. We’ve come back to about that pre-trade-war level.”

Support for More Acres

The incredible fundamental turnaround in corn and soybean prices will be a key factor this spring, says Brian Grete, editor of Pro Farmer.

“We’ll see a big increase in corn and soybean acres, and both crops need more acres,” he says.

All Eyes on China

For fiscal year 2021, China is forecast to be the largest U.S. agricultural market, a position it last held in 2017. Strong Chinese demand for corn and soybeans is driving the forecast, which shows exports at a level not seen since 2014.

For the first four months of the 2020/21 marketing year, the U.S. shipped a record 56.6 million tonnes of corn and soybeans — which is nearly 80% above a year ago.

So far in 2021, China has put a record number of corn purchases on the books. “China will bundle purchases, but it is usually for political reasons,” says Arlan Suderman with StoneX. “It seems they saved their big purchase for the first week of a new administration.”

High Demand Draws Down Supplies

From a historical perspective the soybeans stocks-to-use ratio is on the cusp of a record low, and the corn stocks-to-use ratio is at an eight-year low. “We need to rebuild stocks for corn and soybeans,” says Brian Grete of Pro Farmer. “If summer weather doesn’t allow us to do that, you’re talking about a game changer again.”

USDA Chief Economist Expects Continued Chinese Demand, Battle Over U.S. Acres

Thu, 25 Feb 2021 19:33:24 GMT

USDA is already predicting a record 182 million acres of corn and soybeans in 2021, assuming a normal weather year. Much of that added acreage will come from 2019 and 2020 prevent plant acres.

If planting weather is good, expect prices to drive corn and soybean planting in nearly all available acres, according to USDA Chief Economist Seth Meyer.

“If we have an open window in terms of weather and folks can get in the field, you can certainly assume that those prices will incentivize them to do so get out there and get into the field,” Meyer told a panel at Farm Journal’s Top Producer Summit.

USDA Chief Economist Seth Meyer is a speaker at the Online Top Producer Summit. Learn more here.

Tight supplies are driving such a price battle over acres that even specialty crop acres are going to have to compete.

“It’s going to put pressure on those specialty crop prices to go higher in order to maintain some of those acres as well,” Meyer said.

USDA’s current estimate, released at the Agricultural Outlook Forum, is based on historically ‘normal’ weather and current price pressure, according to Meyer. The first projection with on-the-farm data comes next month with the Prospective Plantings report. That could set off more bidding for acres.

“That’s almost like the first part of a bid ask, right? That’s the farmer saying, ‘Hey, when I see prices today, here’s what I intend to plant,’” Meyer said. “Then you’ll get a further signal from the market that’ll try and balance that out. Right? So, the next observation we’ll get is the farmers’ chance to say, ‘Hey, here’s what I intend to do.’ So the market will get a chance to bid at that.”

The continuing X-factor is China. Will the communist nation continue to buy U.S. ag products at the same rate or greater as in 2020? Will it live up the commitments of the Phase One trade deal. As Meyer notes, the acreage and price projections rely on those continued purchases. He says there is significant evidence that those purchases will continue.

“You can’t say no, no, I’m 100% confident, it’s always a risk when things are on the book, but look at the strength of those buys. And again, let’s go back to that turning point in August of 2020. Remember, our view of the size of the US corn and soybean crop was getting smaller at that time, prices were rising, and yet the Chinese came in and continued to buy very strongly,” Meyer said. “So, the Chinese are buying into rising prices. And when you look at the prices, we’re forecasting for next year, you need - and we would have in there - an export number consistent with continued demand by China.”

That doesn’t mean that there aren’t question marks around China and their projected demand.
“There are also things that that we always have to keep in mind, which is while they are taking in a large amount of corn, it’s not so much larger than the corn equivalents they were taking in in 2015 when they were buying stocks,” he said. “So part of the problem here is this looks like good solid demand as the swine herd grows, but China is not the most transparent when it comes to understanding what is their underlying production. What is their underlying stock position when it comes to corn? I think it remains a big question, and we don’t have a perfect picture of it.”

So, how does Meyer see that China corn purchases picture unfolding in 2021?

“There’s more than 11 million metric tons on the books now that should be shipped to China before September one. Now the problem is, of course, they can cancel those sales or they can roll those sales,” Meyer said. “But you look at that as what do we think underlying Chinese demand looks like? What’s on the books? It’s not costless to cancel or roll those items.”

That cost, Meyer said, makes it likely that the Chinese will follow through with the purchase commitments.

“Then you look at the overall global balance, right?” said Meyer. “We look for these signals again, because the Chinese aren’t that transparent, and sometimes you get little hints of mixed items. There’s phytosanitary issues with corn from Brazil for instance. They don’t buy corn from Brazil. They like to keep that lever on keeping control of trade. And so right now they seem to want it and they seem to want to buy it from us. The question is how bad do they need it, and how would those SPS issues unfold if they really, really needed it badly? So these are all questions where we try and figure out what the market balance looks like. And clearly, the export number that we’re suggesting for next year says that this demand is going to continue in the same magnitude as we’ve got now.”

Read more coverage of the Top Producer Summit

Analyst: USDA Waiting for Corn Shipments to China

Tue, 09 Feb 2021 23:07:36 GMT

USDA dropped corn ending stocks by 50 million bushels in Tuesday’s World Agricultural Supply and Demand Estimate (WASDE), reflecting an equal increase in corn exports to China. The market was expecting a shift in the 100-to-200-million-bushel range, which resulted in a 7¢ drop in the March corn contract.

“The trade really wanted to see USDA get more aggressive on increasing corn export demand, especially after all the sales we had seen to China about two weeks ago,” notes Ted Seifried of Zaner Ag Hedge.

Look for USDA to remain cautious with China export numbers, according to Seifried, as he says the agency is waiting to see corn shipments before adjusting the export and ending stocks numbers much further.

“While sales for corn have really gotten great, especially those big, massive sales to China, the question has to be can we actually physically ship that amount of corn between now and the end of the marketing year?” Seifried asks. “I think what we saw today on this USDA report was a reflection of USDA wondering the same thing. I think what they’re going to want to see is multiple weeks of sustained, really aggressive and strong export shipments for corn before they can say we’re comfortably raising the export projections going forward.”

USDA pegged soybean stocks at 120 million bushels, the tightest supply in several years. That means there likely won’t be a whole lot of action in the soybean market, according to AgriTalk Radio’s Chip Flory.

“When you get supplies as tight as they are in the U.S. right now, if an end user is going to get more supply going forward, they’re going to have to buy it from another end user. They’re probably not going to get it from farmers, there’s just not that many beans left to move to market,” Flory says. “What that means is we’re moving supplies around among end users. Once an importing country starts bidding beans away from a U.S. crusher, then we can anticipate some more fuel in this market.”

Seifried sees the WASDE number for soybeans driving price rationing.

“When the dust settles, we’ll be looking at this soybean number saying, ‘hey, this not only justifies everything we’ve done to this point, but we get we have to watch exports very, very closely because, for the most part, we need to shut them down.’ We need to price ration soybeans. We have not been successful in doing that just yet,” he says.

And while prices retreated following the report, Flory points out nearby corn remains above $5.50 and soybeans just above $14. Those prices will continue to draw new acres into production in 2021, according to Farm Bureau Chief Economist John Newton.

“I certainly think we’re going to likely see more corn and soybean acres in 2021,” Newton says. “The thing to pay attention to is that we had nearly 10 million acres of prevent plant in 2020, so we could see some of those acres, if the weather is favorable and provides enough time for folks to get out in the fields, come back online.”

Corn, Soybeans Rise on Tight Supply WASDE Predictions

Fri, 13 Nov 2020 15:37:41 GMT

Traders were expecting bullish numbers from Tuesday’s World Agricultural Supply and Demand Estimates (WASDE), but the projections were even friendlier than anticipated.

“USDA made some fairly substantial downward revisions to the production estimates and also some fairly substantial upward revisions to some of the demand estimates,” Joe Vaclavik of Standard Grain told AgDay’s Clinton Griffiths. “So we’re left with a much friendlier looking situation here.”

Corn was up nearly 20 cents following the report. Soybeans jumped more than 40 cents.

“We’re now looking at an 11 and a half percent stocks to use ratio for the United States that essentially represents the tightest supply and demand situation on paper for the United States since 2013,” Vaclavik said. “If you think back to 2013, where prices were during that timeframe, they were not three and a half to $4, or even four to four and a quarter, they were much better than that.”

Vaclavik says the upward price pressure is even greater on soybeans.

“The stocks to use ratio is projected at 4.2% on paper, which is very friendly historically, again, the tightest since 2013,” Vaclavik said. “Prices back in that timeframe in beans were not 10 or $11. They were 13 or $14. I’m not saying that that’s where prices are going, but I’m saying that based on what was printed on paper here today, you could make the argument that maybe we should go to those prices. I don’t know if I’m in that camp, but there will be people who make that argument.”

Corn production was estimated by USDA at 14.507 billion bu., below the trade expectation of 14.659 billion bu. and down more than 200 million bu. from the October estimate.

Bean production was estimated at 4.170 billion bu., down from the trade estimate of 4.251 billion bu. and down nearly 100 million bu. from the October estimate.

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