Improved planting progress, international news pressure corn and wheat markets; soybeans continue to shine
Wheat was under pressure this week from several items, the biggest coming from talk that Ukraine. Corn was under pressure from improved planting progress. But soybeans continue to be the bright spot in the grain markets.
Editor's note: Catch Randy Martinson every Friday after markets close on the Agweek Market Wrap at agweek.com.
The first week of June had the grains under heavy selling pressure. Wheat took the biggest hit dropping well over a $1 in all three exchanges while corn trimmed almost 50 cents off its price. Soybeans were the best performers, closing with 17 to 35 cent losses, all of which came on Friday, June 3.
Wheat was under pressure from several items, the biggest coming from talk that Ukraine was going to re-enter the wheat and corn export market. Russia is pushing hard to get Ukraine back into the export game, so much that Russia has agreed to allow for safe passage through the Black Sea. Russia has reportedly cleared the mines in two ports and is expecting Ukraine to clean the mines up on the path to the ports. Ukraine officials are estimating it will take six months to accomplish this task, but Turkey is estimating the time to clean up the path at five weeks.
- Kansas cattle deaths had multiple factors but likely won't impact the cattle market
- Quarterly report and labor disputes influence markets this week
- Farmers look for premium for remaining 2021 corn, soybeans
- Markets keep a watchful eye on weather and reports
- Liquidation, weather and stock market improvement make for a volatile week in the markets
The United Nations is in favor of getting Ukraine back online and has planned a meeting between Russian and Turkey officials. It is interesting that Ukraine is not invited to the meeting. This just has the feel that the fox is guarding the hen house.
The pullback in wheat has been heavy with most contracts posting over $1 losses. Does it look like the top is in in wheat? Maybe for the short term as the market sorts through just how many acres were planted. In the long run, not all of the intended spring wheat acres will get planted. And with poor rated winter wheat crop, the U.S. is likely going to show a sizable production cut in 2022. That will be friendly wheat in the long run, but without at least some improvement in exports, it will be tough for wheat to rally above current highs.
Corn has also seen heavy pressure, mostly from good planting progress and improving weather conditions. Planting is above the five-year average in most of the big corn production states. Only North Dakota, Minnesota and Pennsylvania are lagging in planting progress. And it could be argued that Minnesota and Pennsylvania have caught up to average this week. That leaves only North Dakota trailing, and very likely that the state will see a significant amount of corn going to prevented planting.
Soybeans have been the bright spot. Strong demand and thoughts that acres will not increase as much as expected in March have been supportive. There has been a lack of export news but the past few weeks have seen a couple exports sales announcements. China was in and bought soybeans and Pakistan also bought a jag of U.S. soybeans. Both of these sales took place while soybeans were at or near contract highs. Tight supplies and strong end user demand continue to keep basis level firm as well.
The Environmental Protection Agency and the White House finally released their biofuels mandate for 2020, 2021 and 2022. No one really cares about 2020 or 2021 as those year are already in the books, but they are watching 2022. The mandate for 2022 is set at 20.63 billion gallons, of which 15 million gallons is set to be ethanol and 5.63 million gallons will be advanced biofuels of which 2.76 million gallons needs to be biomass diesel. This is right in line with December’s estimate of 20.77 million gallons. This is friendly both corn and soybeans.
The second week of June started off with the grains gapping higher. Support came from reports that Russia is once again back attacking grain elevators in Ukraine (which will likely make it difficult for Ukraine to accept Russia’s help to export reserves).
Light support came from expectations that producers are starting to switch spring wheat and corn acreage over to later season crops.
The June 6 Crop Progress was negative to the grains as planting progress was ahead of expectations and crop ratings were sharply higher than expected. As of June 5, 94% of the nation’s corn was planted versus 86% last week and 92% for the five-year average. This was 1% better than expected by the trade. Once again, the only states that are showing issues in planting are Minnesota which is 93% planted versus 82% last week and 96% average, North Dakota at 81% planted versus 56% last week and 92% average, and Pennsylvania at 79% planted versus 63% last week and 84% average.
It is likely the 7% in Minnesota (546,000 acres) and 19% in North Dakota (684,000 acres) will not get planted. Martinson Ag is still expecting North Dakota, South Dakota, and Minnesota corn acreage to be down 1 million to 1.5 million from expectations.
On the flip side, the corn that is planted in in excellent condition. The first crop condition rating for corn came in at 73% good/excellent, 1% above last year at this time and 5% above expectations.
Soybean planting progress continued to take a back seat. As of Sunday night, 78% of the nation’s soybeans were planted versus 66% last week and 79% average. The only states behind in planting progress are North Dakota at 41% planted versus 23% last week and 85% average, Minnesota at 72% planted versus 55% last week and 90% average, and South Dakota at 77% planted versus 61% last week and 79% average. Just between North Dakota (4.1 million left to plant) and Minnesota (2.2 million left to plant) there are 6.3 million acres of the 20 million left to plant. The final planting date for crop insurance purposes in June 10.
Winter wheat harvest continues to make slow progress. As of Sunday, 5% of the winter wheat was in the bin versus 0% last week and 6% average. Harvest has been slowed down due to recent rains. So far yields have been disappointing. Winter wheat crop condition improved 1% to 30% good/excellent.
Hard red spring wheat planting is estimated at 82% complete versus 73% last week and 97% average. As expected, the two states lagging progress are Minnesota at 65% planted versus 53% last week and 98% average and North Dakota at 74% planted versus 59% last week and 97% average. In total the U.S. has 2 million acres of spring what left to plant, 1.4 million in North Dakota and 567,000 in Minnesota. Like corn, producers are starting to switch acreage over to later season crops.
Barley planting progress is also trailing the five-year average pace. As of June 5, 91% of the nation’s barley crop was planted versus 85% last week and 97% average. North Dakota producers are 75% planted (22% behind average) while Minnesota producers are 60% planted (38% behind average). That leaves 264,600 acres of barley unplanted in the U.S., of which North Dakota has 185,000 acres left to plant and Minnesota has 20,000 acres left to plant.
Sunflower planting progress is estimated at 33% completed versus 50% average. North Dakota is reporting planting progress at 33% versus 67% average.
Weather forecasts have turned to be a little friendly. Rain has been all but pulled out of the forecast for the northern Plains with the next five to seven days expected to be dry and warm. This is negative short term as it will help keep planters rolling. The friendly part of the forecast comes in the six-to-10-day and eight-to-14 day forecast as it is showing a warmer, drier trend starting.
Traders were starting to position ahead of the June 10 Crop Production report. Early estimates are only calling for minor changes from the previous report. The biggest question for this report is, how much will USDA increase old crop soybean exports?
Cattle closed the first week of June with solid gains, and that support has spilled over into the second week, giving cattle more strength. Cash has held a strong premium over the futures market and now that June is in delivery, those two seem to be migrating toward each other. That along with a better performing stock market and tight supplies has helped cattle stage a decent recovery.
Upcoming reports and market moving items include USDA’s June Crop Production report, scheduled for June 10 (after the deadline for this column). The grains will be closed June 19-20 for Juneteenth. July options will expire in June 24. First notice day for July futures will be June 30. USDA will release their Planted Acreage report as well as their Quarterly Grain Stocks estimate on June 30.
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