This week’s action:
Corn July down 27 at $5.56
Beans July down 82 at $13.07
Feeders August up 6.10 at $235.10
Fats June up 1.50 at $165.90
Hogs June down .975 at $83.150
Corn Dec23 down 7 at $5.00
Beans Nov23 down 48 at $11.74
KC Wheat July down 54 at $8.25
Dec corn Feb 1 – today: $5.58 (72% through seasonal)
Nov beans April 1 – today: $12.72 (32% through seasonal)
This week last year:
Dec22 corn: $7.65
Nov22 beans: $15.30
Jul22 HRW: $13.79
Market Recap:
It was a tough week for row crop commodities this week. We began the week with good planting pace for corn and soybeans. As of last Sunday, corn is 65% planted compared to the 5-year average of 59% and 45% a year ago. Soybeans were 49% planted compared to 29% last year and the 5-year average of 36%.
Keep an eye on North Dakota. They are woefully behind their planting averages for both corn and soybeans. In the Prospective Planting Report, USDA predicted North Dakota to plant 3.75 million acres of corn (4% of all US corn acres) and 6.55 million acres of soybeans (7.5% of all US soybean acres).
News of China cancelling 272,000 MTs of corn purchases broke mid-week and political forces were able to agree on a Black Sea Grain Corridor extension.
The Plains Crop Quality Tour went through Kansas this week and estimated final statewide yield of 30 bpa. This is +1 bpa from NASS’s most recent projection, but 15 bpa lower than the 5-year average. If realized, this would produce a 178 million bushel Kansas crop compared to 244 million bushels last year (down 66 million bushels). USDA is currently forecasting a 191 million bushel crop in Kansas. This crop is on pace to be the smallest Kansas HRW crop in 66 years.
USDA recently reported expectations of only 67% of planted HRW acres to be harvested. This would be the lowest harvested ratio since 1917.
Forecast:
Below normal rainfall is forecast for most of the Midwest over the next two weeks, with the eastern corn belt to receive limited rains into June.
The National Oceanic and Atmospheric Administration are giving 80% odds of at least a moderate El Nino in the Northern Hemisphere with a 55% chance of a strong event.
Economy:
The Chicago Federal Reserve published their most recent quarterly AgLetter last week. It reported the average interest rate for farm operating loans at 7.97%, which is on average 3.33% higher than last year. The average farm real estate loan is 7.93%, which is up 2.7% from a year ago. Farm operating and real estate loans have not been this high since 2007.
Ag commodities have been in a bull market since mid-2020. This has supported rising farmland values which have now rallied 14 consecutive quarters. Tractor prices are 5% higher than last year, while combines are 16% higher. Sales of 4WD tractors are 152% higher through March compared to last year and combine sales are 172% through this point one year ago.
Three years ago, a 30-yr mortgage rate was 3.24% and the median existing home price was $284,000. The current 30-yr mortgage rate is 6.39% and the median home price is $389,000. Assuming 20% down, the result is a $21,000 increase in down payment and a 97% increase in monthly payment (from $987 to $1,944).
US commercial real estate prices fell in Q1 for the first time in more than a decade.
The 6-month Treasury yield has moved to 5.38% (highest since 2001) as chatter of another 25 bps hike in June has gained steam.
Something that probably means nothing:
Federal tax revenue is down 6% while US government spending is up 7% year-over-year. This has resulted in a $2 trillion increase to the budget deficit.
Enjoy your weekend!