• jcrist18

Market Thoughts

July corn lost 3’4 to finish last week at 781’2. Futures did find their way above 800 again on Thursday before falling sharply to close out the week. Nearby corn has actually consolidated somewhat over that last month with daily prices touching somewhere between 780-810 nearly every day. July soybeans gained 24’4 to close at 1646’4 after rallying almost 75 cents from a Monday low of 1578. Spring wheat continued its furious advance, adding 116’2 cents to close at 1325’0.

Thursday’s S&D report featured the extremely rare step of reducing new crop corn yield 4 bpa to 177 from February’s Ag Forum 181 estimate. The last time we saw this was in 2013 and then as now it was an acknowledgement of the likely impact of widespread planting delays. Thursday had plenty of bullish news for wheat as both U.S. and World wheat ending stocks were again reduced and landed toward the low end of trade estimates. Old crop corn was kept in check last week by a marketing year low for weekly export sales, slow shipment pace and weak Gulf basis. That said, corn/bean/wheat new crop contracts surged higher this week. Perhaps giving undue credit to our backyard issues but we’re still inclined to think the ongoing pattern of severe weather all over the world keeps grains supported. NW Corn Belt conditions have deteriorated significantly from last week’s already bleak outlook and overall the entire U.S. crop remains well behind desired planting pace.

With much of North Dakota underwater and another mid-week system forecast, the conversation has inevitably turned to Prevent Plant. The below chart, courtesy of Ryon Boen/Western Agency helps illustrate the one point that is already apparent to most – there is a massive financial incentive to plant anything that can be planted. Most crops would generate over $200 additional profit per acre with canola over $300/acre and wheat not far behind it. Even planting a crop and falling back to insurance guaranteed income would still drastically outperform prevent plant. This spring has been eerily similar to 2013. ND corn was similarly 1% planted on May 9th both years. 2013 saw the majority of North Dakota corn planted the last week of May with over 20% planted in June. It actually froze in mid-September that year and corn still ended up near-trend with only minor test weight issues.

New Crop Spring Wheat futures are now within 2 cents of their all-time high from winter 2008. 1318’6 is ~40% higher than futures have ever been at harvest. Similar to the canola situation we highlighted a couple weeks ago, spring wheat is the latest example of grains moving into unprecedented territory.

This is far from a perfect comparison but during the 2019 Corn Belt planting delays, futures rallied 20% from May 9th to June 17th. A similar move this year would put corn at 8.40.

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