After a strong start to the week, corn and soybean prices trended lower. The weather looks to be preparing a window for more farmers to start planting next week, as as farmers look to get this year’s crop in the ground, analysts want farmers to not lose sight of marketing opportunities during their busiest time of year.
USDA says 2% of the U.S. corn crop is planted, which is on track with average. Farmers in west central Illinois started planting this week, but wet weather continues to be the theme in the Northern Plains and Mid-South.
“The Mid-South, Delta area is behind in general, and their window, as far as beating the heat is a little bit smaller. So, they’ve got some catching up to do and some more rain on tap,” says Chip Nellinger of Blue Reef Agri-Marketing.
Better weather forecasts as well as some technical trading put pressure on prices to start April, according to Nellinger.
“I think right now the market has digested that the stocks and acreage report, they’re looking ahead to the weather,” he says. “And this is typically a time of year where it’s a little bit cloudy and murky as far as what the outlook is. So, you can see some sloppy choppy trading here as the market tries to adjust as forecast ahead of us.”
Dan Basse of AgResource Company says international trade is also still moving the markets.
“As you look at the Russians, we had multinationals, almost all of them, I don’t want to say get kicked out of Russia, but they left Russia, unwillingly, with some strong elbows to the middle rib,” says Basse. “And so as you think about that, the Russians are taking control of the grain industry, much like they did their petroleum, this is going to diminish transparency in Russian grain trade. I think you’re going to see more, let’s say country to country transactions.”
He says Brazil’s harvest is also catching some attention, as the crop is 80% harvested. Prices in some portions of Brail are $1.80 discount to the U.S. Gulf.
“That’s giving the soybean market some pause as it tries to push its head above $15 for extended periods of time,” he adds.
Nellinger says it’s not the changing geopolitical situation in Europe moving the wheat markets. Instead, he says it’s weather, but only for Kansas City wheat.
“I think the Kansas City market has taken note of the weather in the Plains, but the Chicago market is where most of the fund and money flow comes in,” says Nellinger. “And they haven’t quite cared yet about the Russian situation, or this weather in the Plains. They’ve got a big short position on, and all you need is to keep this weather on the dry side well into April and the first half of May, and I think that you’ve got the spark for a nice rally potentially in this wheat market.”
While there is a lot of changing variables around the globe, along with weather moving market sin the U.S., Nellinger reminds producers that spring planting may be a hectic time, but it’s also the time to not lose sight of marketing opportunities for your crop.
“Oftentimes when it’s busiest is when there are opportunities in the market, when you’re busy doing something planting, field work, spraying and harvesting,” says Nellinger. “ And so just don’t take your eye off the ball here. These markets have been very volatile, there are going to be opportunities ahead of us at profitable levels, but we just have to have a plan and be ready to execute it when we see those opportunities.”
Basse thinks this summer has the potential to be extremely volatile in the commodity markets, especially after last week’s USDA Grain Stocks report revisions.
“We are on we are on razor thin old crop stocks. Again, if you look at the stocks report, corn, wheat and soybeans combined are 680 million bushels less than last year, and I’d remind everybody corn last year made it to $8 a bushel. So, as we look at these markets, it’s new crop corn stocks that are the most bearish, but with these corn prices at $5.50, that’s not a place to be selling. Any kind of weather problems is going to have a very strong reaction to the upside. So, this is the year you reward rallies but you’re patient not doing much until we get to the determination of yield and crop size later in the summer.”
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