This week’s action:
Corn May down 28 at $6.49
Beans May down 2 at $15.19
KC Wheat May down 62 at $8.33
Feeders April up 3.125 at $193.675
Fats April up 1.700 at $166.400
Hogs April up .625 at $85.975
Corn Dec23 down 20 at $5.76
Beans Nov23 down 12 at $13.74
KC Wheat July23 down 55 at $8.26
Spring Insurance Price so far:
Corn Dec23: $5.94
Beans Nov23: $13.78
Current Ratio: 2.32:1
We finally saw some movement in grain prices this week, unfortunately it was to the downside. Better than expected rains across South America with more added to the 2-week forecast along with rain across the Midwest ahead of spring weighed on prices as did news that Ukraine is seeking to extend their export corridor for another year while the war with Russia continues. Prospects for Argentina’s crop are still slipping while Brazil’s estimates continue to rise, and their export offers are much cheaper than US which will limit our exports even more in the months ahead. US corn export sales this week were 32.4 Mil down from 40 Mil last week, soybean sales were 20 Mil vs 16.8 last week but still slow, and wheat sales were 12.4 Mil compared to 7.7 last week. Total commitments for corn are down 40% from last year, soybean commitments are 1.5% lower, and wheat is down 6% vs last year. Russian wheat export offers are getting cheaper the last few weeks as they try to get rid of their record harvest from last year which is putting pressure on wheat futures.
The USDA Ag Outlook Forum this week showed total planted acres for the 4 major crops (corn, soybeans, wheat, cotton) at 238.9 Mil acres this spring compared to 240.7 Mil last year. Corn acres are expected to be 91.0 Mil, up 2.4 Mil from last year while soybeans are steady from last year at 87.5 Mil. Soybean acres could increase some if we see double cropping behind wheat later this spring. Wheat seeding is expected to be 49.5 Mil acres which is up 3.8 Mil from last year. The USDA estimates the average farm price for corn at $5.60 and soybeans at $12.90. This assumes normal production with ending stocks rising and would be much below the average prices we’ve seen the last couple years.
Below is the Cattle on Feed report released this afternoon. The report keeps the bullish news going with lower On Feed and Placements compared to expectations while Marketings were slightly higher than expected. Feeder cattle futures also found support this week on lower corn prices and are getting back near the contract highs made last August. Live cattle continue to make new contract highs each week and are nearing all-time highs in the deferred months. Seasonal trends argue for a correction in futures in the next few weeks though late April/Early May so if you are looking to put hedges on or add LRP protection this would be a good time to look at that.
Line of Credit Conversation:
We took some time to spell out a couple scenarios of what that looks like at various interest rates and storing grain in the bin (below). Now, I’m not saying we need to go 100% sold and avoid interest at all costs. That obviously doesn’t work logistically and within all marketing plans. What I am saying is, make sure you are aware of this situation if you’re borrowing money and what futures/basis appreciation we need to have to outpace that interest cost.
Using rough futures averages of today, Corn at $6.75 and Soybeans at $15.30. In this example, we’ve got 100,000bu of corn in the bin and 10,000bu of beans in the bin with no price established with them.
To walk through one example together: If we are borrowing money at 6% on the $675,000 value of corn in the bin, we’re paying $3,375 of interest a month, $110.96 of interest a day, OR probably the simplest way to equate things is back to per bushel, which ends up being $.03 per bushel per month in storage.
Things to keep in mind, if you are bullish futures, we can go move physical grain today and re-own July futures at a 9c discount to the May contract. If you are bullish basis and want to hold grain in today’s market out into July, be aware of what basis appreciation we’ll need to outpace interest cost. Example: In today’s market, Cargill – Blair, NE is bidding $7.15 cash (6.60 + .55H basis) for February delivery or $7.26 cash (6.51 + .75N basis) for June delivery. If we are wanting/needing to hold grain out to June, we need futures or basis to appreciate at least 20c (at 8% interest) to break even. (4 months x $.05 = $.20c per bushel).
Delayed corn planting in Brazil. Their 2nd and larger corn crop is expected to account for more that 75% of total production this year. Recent rains have resulting in planting delays.
More rain is expected over the next 7 days and a good chunk of the 2nd corn crop area will be impacted.
Something that Probably Means Nothing:
Nebraska Volleyball will play a match in Memorial Stadium this fall on August 30th. The stadium sits over 85,000. For reference, the current regular season attendance record was set by Florida at Wisconsin of 16,833 in 2022. The all-time attendance record is 18,755 set between Nebraska and Wisconsin in 2021 for the National Title.
Tickets go on sale April 25th for season ticket holders and April 26th for general public. Tickets will be $25 for adults and $5 for high school age and under.
Have a great weekend!