Jon Acheve
April 19, 2021
Planting Progress
While temperatures were nearing normal last week on our farm in southeast Nebraska, a cold front has pushed in and put a stop to any planting progress. Usually, we start planting corn by April 11th and try to finish within 7-10 days. However, ground temperatures in our area remain below 45 degrees and forecasts show lows near 25 degrees on Tuesday. The weather outlook later in the week looks more favorable, so hopefully everyone can start planting soon. The entire corn belt along I-80 and I-70 seems to be in the same situation through the 23rd.
South America’s Second Corn Crop
Brazil’s weather is looking dry, so there are growing concerns for their second crop’s yield potential, with some already speculating a possible 20% yield reduction. If this dryness continues, it will likely support corn prices. However, it’s still early and many in the trade assumed Argentina would have a 20% yield reduction due to La Nina. However, late season rains have improved conditions there and losses may only be around 10% below normal according to recent estimates.
Corn Basis
Corn basis has increased throughout the US this week. Farmers in the north are enjoying some very high basis levels this spring, with values similar to what central Iowa farmers normally see for this time of year. This is due to significant prevent plant acres last spring throughout North Dakota. Add that to some ethanol plants in other parts of the country increasing production and farmers getting ready to plant, and corn basis may have some upside potential going into summer.
Soybean Outlook
Soybean futures are back to trading at the upper end of their recent range. Plus, basis values throughout the US have rallied 10-20 cents in just a week. These levels have not been seen since the summer of 2014.
However, there are some concerns that could put downward pressure on bean prices moving forward. Soybean meal prices haven’t pushed back to the top end of their recent trading range. The extent of another round of African swine fever in Chinese hog herds is uncertain. Plus, recent announcements that additional wheat could be fed to hogs in China has the potential to impact both corn and beans. While wheat can be a substitute for corn, beans can be affected because wheat has a higher protein level that could in theory reduce soybean meal in rations.
Still, the USDA is indicating an extremely tight bean supply. Rationing is expected to continue for old crop and more bean acres for 2021 will be needed. This may mean better prices are still to come.
Looking Forward
For over the last 10 years, the corn market has pulled back a little in mid-April as the planters hit the fields, while bean prices have usually increased slightly during that time to perhaps “buy acres”. This pattern seems likely to happen again this year; however, once May and June come there will inevitably be a weather scare that will impact both markets again.
agweb.com
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