Grains closed mixed as wheat and corn closed higher, and soybeans closed lower. For the day, corn closed 6 to 7 cents higher, wheat closed 15 to 16 cents higher, and soybeans lost 18 cents on the July contract, and 9 cents on the new crop contract. The outside markets were mixed, with crude oil up $1.12, the dollar index was up 0.37, and gold was unchanged. The financials were weaker, with the Dow Jones index trading 231 points lower, and the NASDAQ closing down 160 points.
Wheat traded higher on reports that the Russians are not allowing ships into the Yuzhny port. The Wall Street Journal reported that Ukranian backed volunteers are fighting Russians in Southern Russia. This was an unexpected development, as Russia is on the defense.
The planting progress report from yesterday showed good progress as corn is now 81% planted, compared to 69% last year, and 75% for the 5 year avg. The 81% planted is the 12th slowest pace since 1991, but still puts the US in position to raise an above trend yield corn crop. Below is the history for May 21st since 1991.
Soybean planting progress came in at 66% yesterday, up 17% on the week, and 19% ahead of last year. The 5 year avg planting progress is at 52%. The current pace is the 4th fastest since 1991, behind 2000, 2012, and 2021. Below is the history since 1991.
Looking at state soybean planting progress, here are some interesting stats since 1991 for May 21st in the Top 5 Lists:
Missouri @ 74% – Fastest soybean planting progress
Illinois @ 85% – 2nd fastest soybean planting progress
Kansas @ 54% – 5th fastest soybean planting progress
South Dakota @ 56% – 4th fastest soybean planting progress
Nebraska @ 79% – 5th fastest soybean planting progress
North Dakota @ 20% – 5th slowest soybean planting progress (since 2000)
The weather forecast looks DRY for many areas of the corn belt with above normal temperatures. This should help ensure that most of the acres in North Dakota get planted, but the market is still expecting some prevent plant. Some weather forecasters are calling the current weather pattern a flash drought, and it’s only going to get worse for the next 2 weeks thru June 6th. The National Weather Service is predicting a rapid onset drought risk for areas of Eastern Iowa, Illinois, Indiana, and Ohio. We’re not sure if we have ever seen a prediction like this from the NWS! There is some prime farm ground in these 4 states that won’t have much rain for the next 2 weeks!
The corn and beans planted ahead of this flash drought should be ok as some of these areas in Illinois have had 6 to 10 inches of rain since March 1. If there is a time to be dry, it’s when the crop is getting started and sending its roots deep. Corn will be pushing knee high in parts of Iowa and Illinois by the 4th of June this year. It’s not all good in Iowa, as farmers are replanting soybeans and running rotary hoes to try and help soybeans get thru the crust. The real concern is mounting on the fields just planted into dry soils and struggling to find moisture to emerge. It’s not recommended to plant soybeans more than 2.5 to 3 inches deep to find moisture. Keep in mind that 20% of the corn and 34% of the beans were still left to plant as of May 21st.
The funds have built a short position, and some are looking to lock in profits and go to the sidelines. It will take more than a little weather scare to change the opinion of some traders, and we will be watching close for opportunities to price more old and new crop grains. As you will see below, some of these carryout projections are downright huge, and that’s why we have seen the funds shorting the market. A change in fundamentals or technical picture is needed to get the funds to turn long.
Corn & Soybean Acres, Yield, Production, and Ending Stocks for 2023/24
The USDA gave us their first look at 2023 yields and production on May 12th for the 2023 crop year. With planting progress near normal, and assuming normal weather this summer, the US corn yield was pegged at a record 181.5 bpa, while the soybean yield was also pegged at a record yield of 52.0 bpa. Below we show some production what ifs for the 2023 crop year.
CORN
On the table below, we show the USDA corn supply & demand numbers and projections going back to the 2017 crop year. The current May USDA crop report for 2023/24 is in the blue highlighted circle. The current projections using 91.996 mln acres planted, 84.094 mln harvested, and a yield of 181.5 bpa, comes up with a carryout of 2.222 billion bushels. We have some alternative market expectations (Scenario A) for future crop reports in the column next to it. If corn yield would drop 2.5% or 4.5 bpa to 177 bpa, and we potentially lose 1 mln acres due to prevent plant, then corn carryout could drop 541 mln bushels to 1.681 bln bushels. That’s assuming corn demand remains steady at 14.484 bln bushels. A 1.681 bln corn carryout would still make corn rallies hard to come by. To get the corn bulls excited again, we would need a corn yield below 175 to take corn ending stocks closer to 1.5 bln bushels.
In 2023/24 Scenario B, we are using a HIGHER record corn yield of 183 bpa, as some in the market place think El Nino will arrive in time to produce a monster corn yield. We also dropped corn acres by 1 mln acres. This would drop production just 43 mln bushels, and take ending stocks down to 2.179 bln bushels. December corn could possibly have another 50 cents to $1.00 downside with a corn carryout close to 2.2 bln bushels.
We also show the 2024/25 crop year in the last column. While the 2024 crop seems like a long way away, it’s worth keeping an eye on. If we have a carry in from the 2023/24 crop of 2.2 bln bushels, along with 92 mln planted corn acres, and a yield of 182, carryout surges to 2.6 bln bushels. There are a lot of moving parts to the 2024 corn crop, especially with the 2023 crop far from being made. Throw in the uncertainty in Ukraine and Russia, an election year, as well as the oil, nitrogen and fertilizer markets, and all we can do is make assumptions. Keep in mind that this crop is still 20 months away from being harvested. If we increase demand by 450 mln bushel vs current 2023/24 year, the carryout for 2024/25 at 2.6 bln bushels probably does not justify $5.00, or maybe even $4.00 corn. Dec ’24 closed tonight at $5.045.
SOYBEANS
On the table below, we show the USDA soybean supply & demand numbers and projections going back to the 2017 crop year. The current May 12th crop report for 2023/24 is in the blue highlighted circle with 335 mln bushels in carryout. The USDA is currently using 87.505 mln planted acres, with a yield of 52 bpa. With an expected demand of 4.410 bln bushels, the carryout of 335 mln bushel would be the highest since 2019/20
The table above also shows some “What If’s” for the 2023/24 soybean crop. In Scenario A, we are using 88 mln acres of soybeans, which is an increase of 500,000 acres, but dropping yield 2 bpa (4%) to 50 bpa. This would leave carryout at 200 mln bushels, which is very comparable to the current year ending stocks.
The Scenario B next to it is showing an increase in soybean acreage of 500,000 acres to 88 mln acres. Using a record yield of 53 bpa, and bumping demand 57 mln bushels, carryout would rise to 400 mln bushels. This type of outcome could push soybean prices lower by $1 or $2 per bushel.
We also added our first look at the 2024/25 soybean balance sheet. The 2024/25 soybean crop is assuming 89 mln acres planted with a yield of 52.5 bpa. Assuming demand increases due to increased soybean crushing facilities and more renewable fuel being made, it appears carryout could still hover over 430 mln bushel.
Similar to corn, a lot of things can change on these estimates. Brazil and Argentina are the big unknowns for production, and China is the key player for the demand estimates. The USDA is already factoring in RECORD soybean production for both Brazil and Argentina for the 2023/24 crop. The US is not the leader in world soybean production, and Brazil is forecasted to raise a 163 mmt soybean crop next spring. Patience might be the key on the 2024 crop to see how 2023 plays out for production and demand around the world. November 2024 soybeans closed at $11.6375 today.
That’s all for today. See you here tomorrow
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