Wheat planting pace, India heat wave propel wheat markets; corn, soybeans pressured from Corn Belt progress
Weather continues to be the main driver, as cool wet conditions in the northern Plains keep producers out of the field while in the southern Plains hot dry conditions reduced the potential size of the winter wheat crop. Corn and soybeans were under pressure from favorable weather forecasts.
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The grains closed out the first week of May mixed with wheat posting strong gains while corn and soybeans struggled. Weather continues to be the main driver, as cool wet conditions in the northern Plains keep producers out of the field while in the southern Plains hot dry conditions reduced the potential size of the winter wheat crop. Corn and soybeans were under pressure from favorable weather forecasts. Forecasts are calling for the central and eastern Corn Belt to see warm dry conditions through the middle of May, which should allow for planting progress to advance at a rapid rate.
Wheat was also supported by the news that India has just experienced the hottest March on record, which baked their wheat crop. India was expected to be the place holder for the lost Black Sea wheat exports. That might not be the case anymore as India’s crop has started to deteriorate.
Minneapolis wheat was able to push to another new contract high in most contracts while Kansas City only saw new contract highs in the deferred months. Again, slow planting progress and forecasts for more rain supported Minneapolis while the potential for increased export demand helped Chicago. Adverse weather in the southern Plains supported Kansas City.
The start of the second week of May saw a small planting window open up in parts of the northern Plains, but it was quickly slammed shut from another soaking rain system. The northern Plains and western Corn Belt saw rains over the weekend of May 8-9 that lingered through Monday. Another system moved in May 12 that was expected to produce 1 to 2 inches of rain in some parts of Minnesota, North Dakota and South Dakota. This will push planters out of the fields until around May 18 to 20 if realized. This puts the northern Plains close to the crop insurance final corn planting day (May 25 for most counties in North Dakota). The central to eastern Corn Belt saw good progress over the weekend, which is why corn and soybeans traded on the defense.
The May 9 Crop Progress report helped to give the market strength to start the week, but forecasts for an open week limited gains. Most know that producers can put the crop in a relatively short period of time. With somewhat good conditions producers have been able to plant 40% of the corn crop in one week. But that is when conditions are favorable. So far this year, there has not been much favorable weather as of yet. This was confirmed in the report, which showed a much slower planting pace than the trade had expected.
As of May 8, 22% of the nation’s corn was planted versus expectations of 25% and 50% average. This is the slowest planting progress for corn in nine years. Soybean planting progress was estimated at 12% versus expectations of 16% and 24% average. This is the slowest planting pace for soybeans in three years. Spring wheat’s planting progress is estimated at 27% complete versus expectations of 28% and 47% average. This is the slowest planting progress for spring wheat in 11 years.
Winter wheat conditions did improve last week due to rains over much of central and eastern Kansas. Winter wheat conditions improved 2% to 29% good/excellent. Colorado’s crop dropped 1% to 11% good, Kansas’s improved 3% to 28% good/excellent, Montana was up 1% to 13% good/excellent. Oklahoma’s crop improved 3% to 20% good/excellent, and Texas’s crop dropped 1% to 7% good.
Wheat and canola also got a shot in the arm from Stats Canada’s stocks report, which was released May 7. The March 31 stocks estimate put all wheat stocks at 10.1 million metric tons, which was lower than expected and the lowest estimate since 1989. Canola stocks were estimated at 3.94 million metric tons, the lowest estimate since 2005 and a record low.
On the world front, Informa cut their production estimate for Brazil’s corn 3 million metric tons to 115 million metric tons versus USDA’s last estimate of 116 million metric tons. Safras cut their production estimate for Brazil’s soybeans 2.8 million metric tons to 122.3 million metric tons versus USDA’s projection of 125 million metric tons. Informa is also estimating Russian wheat production to be near 82 million metric tons versus 75 million metric tons last year. They are also estimating Ukraine wheat production at 16.5 million metric tons versus 33 million metric tons last year.
USDA released it May Crop Production and World Agricultural Supply and Demand Estimates on Thursday morning for not only the 2021 but also the 2022 crop year. That was USDA’s first real look at 2022’s projections. That report came after the deadline for this column, but early estimates were for corn and soybean stocks to drop due to expectations of increased demand and for wheat stocks to increase due to a decrease in exports.
The USDA was expected to use planted acreage estimates from the Prospective Planting report and trend line yield. A big question leading up to the release was whether USDA would lower potential yield estimates due to late planting, but it seems a little early to be playing that card.
Cattle closed out the first week of May mixed as live cattle ended the week mostly steady while feeder cattle posted gains. Live cattle were under pressure from a disappointing cash trade. Strength from the feeder cattle market and reports of record setting exports in March helped to keep the live cattle from posting losses. Feeder cattle were supported by the lower grain complex.
Economic concerns pressured the cattle at the start of the second week of May. A sharply lower stock market combined with high inflation continues to limit beef demand domestically. The average consumer’s amount of disposable income continues to shrink due to gas prices hitting new highs almost daily and the Fed’s 0.5% hike in interest rates. Cattle have a friendly outlook as supplies are only getting tighter.
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