Grains had their best day in a long time with corn, soybean meal, and soybeans surging higher, while wheat followed along. For the day, soybeans were up 28 ¾ in July, and 22 ¾ on new crop. Corn rallied 9 cents on July, and 6 ¾ on new crop, while Chicago wheat rallied 5 cents, and KC wheat gained 11 cents. Soybean meal was up $13 to $15 a ton, and soybean oil lost 2-5 cents. In other commodity news, cocoa was down 700 and coffee was down $10.40. Both are well off recent highs, with cocoa correcting almost 33% since last week!
The outside markets were mixed today, with crude oil up 3 cents, gold $1 higher, and the dollar index down 0.368. The Dow Jones index gained 332 points and the NASDAQ gained 235 points as investors further digested the Fed report from yesterday, which some are calling having a dovish bias.
Grains caught a bid on the overnight session and spilled into the day session with aggressive buying by the funds. StoneX estimated the funds bought 50 mln bushel of soybeans, 25 mln bushel of corn, and 15 mln bushel of wheat. A combination of wet weather causing delayed plantings, bird flu in cattle and dairy cattle, and a lower Ukraine export market made the funds run for the sidelines. There were also reports of flooding in parts of Brazil. Soybean meal rallied above its 100 day moving average and now sits at its highest levels since January.
The weekly export sales report was released this morning. There was 29.8 mln bushel of corn sold, with the main buyer being Japan, South Korea, and Mexico. Soybean sales totaled 15.2 mln bushels, with Egypt, Indonesia, Japan, and Taiwan the main buyers. Below we show the actual sales made vs market expectations.
The weather forecasts still looks WET for many areas of the corn belt. There were reports of 1 to 2 inches of rain falling in parts of Missouri and Iowa today, and the 10 day GFS map below looks like wide spread 1 to 2 to 4 inches of rain for many areas. This map takes us out to May 12th, so the clock is quickly ticking for early May plantings. Yes there are areas that have some isolated planting taking place this week, but we also have areas going from wet to VERY WET with these upcoming forecasted rains.
MAY CROP REPORT
Below is a recap of the Initial May yield history, final yield history, as well as the planting pace for May 10th. The USDA May yields and first official look of 2024/25 supply and demand will be released on May 10. Many are expecting the USDA to use the Feb outlook yield of 181 bpa, but some are expecting a small drop next week. Very rarely does the USDA deviate their yield in May, but they did it in 2022 and in 2013 due to late planting. The USDA essentially uses a trend yield derived from a weather adjusted yield model. Here is what the USDA stated on the May 2021, May 2022, and May 2023 Corn S&D reports.
From May 2021 USDA WASDE REPORT – Planted acres reported in the March 31, 2021, “Prospective Plantings.” For corn, harvested acres projected based on historical abandonment and use for silage. The yield projection is based on a weather-adjusted trend assuming normal mid-May planting progress and summer growing season weather, estimated using the 1988-2020 time period, and includes a downward stochastic adjustment to account for the asymmetric response of yield to July precipitation.
From May 2022 USDA WASDE REPORT – Planted acres reported in the March 31, 2022, “Prospective Plantings.” For corn, harvested acres projected based on historical abandonment and use for silage. The yield projection is based on a weather-adjusted trend, estimated using the 1988-2021 time period, assuming normal summer growing season weather but lowered to reflect the slow pace of planting progress as of early May.
From May 2023 USDA WASDE REPORT – Planted acres reported in the March 31, 2023, “Prospective Plantings.” For corn, harvested acres projected based on historical abandonment and use for silage. The yield projection is based on a weather-adjusted trend, estimated using the 1988-2022 time period, assuming normal planting progress and summer growing season weather.
What is normal planting progress? In 2022, the USDA accounted for the slow planting progress and still printed a record yield of 177 bpa, which was 2.3% below their February trend yield of 180.5. In 2023, they went with the February yield of 181.5 bpa since the planting pace was at 55% planted. Will the USDA consider 2024 as a normal year and release the 181.0 bpa yield, or do they tweak the yield 1% below trend to 179.2, or even 2% below trend at 177.4? Do they account for the delayed plantings in the Eastern Corn Belt, or do they view this rainfall as beneficial as it increases the odds of a trend yield or higher yield. The drought area is shrinking with the recent rains.
Even if the USDA would print a 177.4 yield, it would still be a RECORD YIELD, and it would leave carryout above 2 billion bushel. It would take a yield in the 175 or lower range and carryout near 1.8 bln bushels to get the bulls excited based on the current acreage forecast. One thing is for sure, the yield that USDA releases on May 10th more than likely will not be the final yield! It’s interesting that USDA has overestimated the corn yield in May the last 5 years. We feel that a corn yield of 179+ on the May crop report is possible based on the current planting pace as well as the upcoming forecast.
USDA Initial May Corn Yield vs Final Yield and Planting Pace as of May 10th
May est Final Yield % Planted May 10th
2024 – 181.0 est. ?????? 47% est
2023 – 181.5 est 177.3 bpa 55%
2022 – 177.0 bpa 173.3 bpa 29%
2021 – 179.5 bpa 177.0 bpa 69%
2020 – 178.5 bpa 171.4 bpa 67%
2019 – 176.0 bpa 167.5 bpa 28%
2018 – 174.0 bpa 176.4 bpa 51%
2017 – 170.7 bpa 176.6 bpa 57%
2016 – 168.0 bpa 174.6 bpa 67%
2015 – 166.8 bpa 168.4 bpa 75%
2014 – 165.3 bpa 171.0 bpa 53%
2013 – 158.0 bpa 158.1 bpa 23%
2012 – 166.0 bpa 123.1 bpa 79%
2011 – 158.7 bpa 146.8 bpa 48%
2010 – 163.5 bpa 152.6 bpa 82%
2009 – 155.4 bpa 164.4 bpa 48%
2008 – 153.9 bpa 153.3 bpa 48%
2007 – 150.3 bpa 150.7 bpa 67%
Here is the chart history going back to 1995 comparing the initial May yields compared to the final corn yields. The USDA May yields were almost “Dead On” in 2005, 2006, 2007, and 2008, while 2013 thru 2018 the USDA underestimated the corn yields those 5 years. The last 5 years from 2019-2023 the USDA overestimated the corn yields. It’s quite amazing that the corn trend yield has improved over 55 bpa since 1995!
Some traders and analysts use May 10th as the magical date to gauge planting pace and how US corn yields end up vs trend. The 5 year avg pace for May 10th this year is 49%, while the long term avg is 58%. Slow plantings in 2019 and 2022 are pulling down the 5 year average. A quick planting pace over 48% seems to suggest higher odds for above trend yields. A slow planting pace usually means there are weather issues, and thus higher odds for a below trend yield. On the chart below, since 1990, there have 21/34 years (61.8% of the time) with yields at, or above trend. There have been 13/34 years (38.2% of the time), with yields below trend.
Of the 13 years below trend, 7 of the 13 years (54% of the time) had planting pace below 48% planted as of May 10th. Only 2 years out of the 21 years of above trend yields did the US corn planting pace fall 48% or lower. This would support the theory that planting pace as of May 10th is important in determining the national corn yield. Weather and rainfall in July and August are major factors in the final yield. If the wet weather forecast verifies, hitting 47% planted by May 10th is going to be a reach. Don’t be surprised if the USDA prints a yield slightly lower than 181 bpa next week.
We will take a look at the soybean history early next week.
Have a great day. See you tomorrow.
