What a difference a year can make in the markets

A year ago, the markets (stock and grains) were forming their bottom and since that time the Dow Jones has rallied 14,000 points, wheat is up almost a $1, corn has rallied over $2, and soybeans have added close to $6 to their price.

Erin Ehnle Brown / Grand Vale Creative LLC

A year can make a huge difference. A year ago, the markets (stock and grains) were forming their bottom and since that time the Dow Jones has rallied 14,000 points, wheat is up almost a $1, corn has rallied over $2, and soybeans have added close to $6 to their price. Those increases have changed the outlook for not only the rural economy but also the general economy.

But the rally that brought the grains off of 10-year lows and then pushed them to eight-year highs has stalled out. Seasonally, this is the time of year when the U.S. grain market struggle as most of the attention focuses on the South American crop. U.S. weather forecasts can add to that pressure, especially if those forecasts are showing improving conditions.

The past week has seen a dramatic turn in the weather, not only in the U.S. but also in South America. The U.S. Southern Plains picked up decent rains, which helped improve winter wheat crop ratings. At this point, the Southern Plains has enough moisture to get the wheat crop off to a good start and the Corn Belt is getting a good soaking to help with planting. The recent rains have been enough that it will likely substantially reduce the drought situation on the U.S. Drought Monitor map. At this point, a few more timely showers will make an average winter wheat crop, but more rain will be needed in the Corn Belt to guarantee an average crop. The long-term forecasts are calling for the Corn Belt to see above normal temps and moisture through mid-summer.

As for the Northern Plains and western Corn Belt, weather looks a little more troubling. The lack of rain in North Dakota and northern Minnesota is concerning, but it is unlikely to become a big story in the grains. It will make an impact on the spring wheat market and soybeans, but not likely corn. At this point, the dry conditions have producers already hitting the fields with wheat being reported planted in western North Dakota. Most are applying fertilizer and making last minute adjustments to machinery as they are waiting for April before getting in the fields.

Weather in South America has also taken a turn for the better. Much needed rain has fallen in Argentina which has helped the crop from deteriorating further but this will not help the crop recover. There has been crop damage done and most is irreversible. Brazil, on the other hand, is seeing drier conditions. This will help get combines rolling once again. Brazil’s problem is that a lot of the soybeans are coming in damaged with reports putting the crop between 8% to 15% damaged. As of March 19, Brazil’s soybean harvest was estimated at 60% complete versus 63% average (14% was combined in the week prior). Planting progress of the second corn crop was estimated at 86% complete versus 95% average (also showing progress of about 14% done since the prior week).


Wheat continues to trade in a lackluster fashion with all three of the wheat exchanges trading near support. Weather forecasts calling for more rain to fall across the Southern Plains is putting pressure on the wheat complex. A stronger U.S. dollar, lackluster demand, and improving crop condition ratings added pressure.

As of March 21, the major wheat producing states reporting winter wheat crop ratings were: Colorado: 33% good/excellent (+8%), Kansas: 45% good/excellent (+8%), Oklahoma: 62% good/excellent (+5%), and Texas: 29% good/excellent (+2%). Oklahoma’s crop was 36% jointing versus 15% the previous week and 31% average. Texas’s crop was 23% headed versus 22% the previous week and 7% for the five-year average.

Wheat’s recent price decrease will likely result in a much lower planted acreage estimate for spring wheat than expected. At this point soybeans, canola and sunflowers all look more attractive than spring wheat. Wheat is oversold and in need of a technical correction, but the bearish fundamentals are proving to be too much at this point. We still feel wheat’s story will not be told until late spring or early summer.

Corn was the bright spot last week, as it should have been. China came in and bought over 3.88 million metric tons of corn in a four-day run. But that does bring up a few questions. Why does China need so much corn if African swine fever is an issue? And why buy the more expensive U.S. corn when Argentina’s corn is cheaper? The bigger question: Can the U.S. now get all of the grain sold in the export market shipped?

Corn shipments remain strong, but reports of drier conditions in Brazil, improving weather conditions in the U.S., and higher than expected estimates for the Prospective Plantings report, coming out on March 31, all weighed on the market.

It was soybeans turn to take charge the last week of March as soybeans traded with solid gains after posting losses the previous week. Although the fundamentals were negative for soybeans with dry conditions in Brazil (which is helping push harvest activity) and rain in Argentina (alleviating drought concerns), soybeans were able to post gains to start the week. The push in soybeans is coming from the sharply higher soybean oil market (which traded limit up on March 22 and to highs not seen in 10 years). Bean oil’s strength continues to come from strong crush margins and strong world vegetable oil demand.

The most interesting development in last week’s performance was that the old crop months held up decent under the improving weather news, as most of the selling pressure occurred in the new crop months. Additional selling pressure in new crop corn and soybeans came from the start of the private analyst estimates for the prospective plantings report. IHS Market is looking for 2021 planted acreage for corn to be 94.3 million while Pro Farmer is estimating corn acreage at 92 million versus 90.8 million last year. For soybeans, IHS has acreage at 89.7 million while Pro Farmer is at 90 million.

We hate to sound like a broken record, but the grains seem to be just passing time waiting for the reports at the end of the month. This upcoming report day is one of the few that can significantly impact two growing seasons. The quarterly grain stocks estimate will give us a look at where demand for the old crop has been while the prospective plantings report give us a look at potential new crop production levels.


At this point, I think the quarterly grains stocks is the more important report as it will give a better look at where ending stocks could fall. And at this point with the recent surge in corn demand and aggressive early selling of soybeans, it is likely stocks of old crop are much tighter than expected.

Cattle took a hit recently, which seemed to be more a function of COVID-19 fears than anything else. Twenty-five percent of the population has received at least their first shot, 13% of the population is fully immunized, and estimates have about 47% of the population having some degree of immunity. But cases started to spike in the U.S. again, which has caused the market to second guess the ability of the economy to get back on its feet as fast as expected, which will delay beef demand.

The March 19 cattle on feed report was friendly as the on-feed number and placements were as expected, but marketing was 1% above expectations. Cash trade did not help the cattle market as it has been stuck $114 for the past six weeks.

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