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Today’s Prices
Grain market finished mixed to mostly higher as traders continue to wait for additional developments in Russia’s war against Ukraine.
Grain Market News
Weekly Ethanol Production
The report shows production at 1.042mb per day, that’s the largest number going back to early February.
That 1.042 is also above the level that’s needed to reach USDA corn use estimate.
This week ethanol production at 1.042mb was 13% above the year ago level, which is shown in the red line, a year-to-date production is up 10.2% compared to USDA estimate that corn use for ethanol will be up only 6.3%.
So, we are above USDA target, and it does appear that we are on track to exceed USDA corn us estimate. That could contribute to lower stock over the next couple of months.
Weekly Stocks of Fuel Ethanol
US stocks of fuel ethanol increased again up to 26.149mb. That’s a record for this week, late march, but it’s not a record high which was set in April back in 2019-2020 when the corona virus started to impact fuel use globally.
It’s worth noting the larger than normal ethanol stock would allow for larger exports through Brazil given the fact that they reduced their import tax from ethanol from 10% to 0%.
Grain Market News
C-B-W Combined Planted Acreage
This chart shows that throughout the crop marketing year, from the baseline numbers that are issued to the February outlook form to the perspective planning numbers we will be seeing next week. Then as we move into the growing season our May WASDE planted acres, June acreage numbers, the October adjustment to WASDE numbers, and then our final planted acreage.
When we look at the final planted acres last year came in just above 227 million acres. USDA in the outlook forum, that’s shown in red, estimated planted acres at 228 million, just shy of a million acres larger than last year.
U.S. Planted Acreage
Last year’s planted area at 227.25 million, this year at 228 would be up about 750 thousand acres from last year.
With the items we mentioned previously, the only way we see to increase corn, bean, and wheat acres would be to steal acres away from minor feed grain, minor oil seed, or to follow up and plant some hay or pastureland.
But unfortunately for cattle producers and dairy farmers hay is very tight, hays prices are very high and it’s difficult to imagine too much hay or pastureland being plowed up with prices being high already.
CRP Acres
After declining 14 years in a row, the Biden administration has added some expenses and raised prices for CRP acreage.
As of late January, CRP enrollment was 22.1 million acres versus last year’s enrollment at 20.8. Therefore 1.3 million more acres are enrolled in CRP and that would take away from potential planted area this spring.
Let’s also keep in mind that the cap for CRP acres is 27 million for next year as of the 2018 farm bill and the Biden administration has mentioned along with USDA that they would be interested in adding another 3-5 million acres into the CRP program to maximize the conservation program.
Currently the US needs every acre possible available, and yet current admin and USDA is trying to add more acres to the CRP program.
U.S. Prevented Plant Acres
Last year corn, bean, and wheat prevent plant 1.2 million, nearly an all-time record low only surpassed by the drought year of 2012.
We are estimating, at minimum, prevented plant acres will probably be 2.27, that would be up 1 million but that is still way below average.
If weather does not cooperate, prevented plant could be even higher and this could take away from available acres.
You may ask, well can you steal acres away from other crops? Minor oil seeds, minor feed grains, etc. But as I mentioned it will be hard to steal acreage from alfalfa or pasture due to the shortage.
Rice
Rice prices are dramatically higher now than they were in April in the planting season last year.
So, it’s not likely that rice will lose acres as prices trying to provide incentive to pant more acreage this Spring.
Cotton
Currently we hit a new contract high today, nearly $133 per bail, that is much higher than last years prices back in the April planting season.
So, cotton is also trying to provide an incentive to plant more acres.
Oats
Oats at $7.36 per bushel today, up dramatically from last year during April which would be the beginning of the panting season.
So, oats are trying to provide an incentive for farmers to plant more oat acres.
Canadian Canola
Canadian canola, with which canola is a popular crop in North Dakota, prices are at record highs that were posted today. That is sharply than it was a year ago near the planting season.
So, canola also trying to provide an incentive to plant more acres.
With this in mind, in order for corn, soybean, and wheat acres to be higher we would have to steal acres away from minor oil seeds and minor feed grain.
Both in the north and south and yet prices of those commodities are significantly higher than a year ago. This is really going to create a significant acreage battle as we head towards the spring planting season.
The bottom line is we have been talking about an acreage battle since late last summer and early fall. The loss of production in South America, both Brazil and Argentina, due to drought and now the lack of supplies out of the Black Sea region.
Russia and Ukraine have created an extreme tightness globally and the acreage battle that we discussed last fall is going to be even more intense due to the loss of supplies in South America and the Black Sea loss now.
It’s hard to imagine for a long term or sustained down trend in this environment, that doesn’t mean we won’t have sharp breaks from time to time, but a sustained down trend seems highly unlikely until we have crops planted and excellent conditions are seen in the May/June timeframe.
July Corn Chart
Corn prices today rallied and were pushing towards the upper end of the sideways range thats been in place over the last 2-3 weeks.
With the market pushing a little higher within that sideways range, it was enough to turn the technical higher as well. Keep in mind the technical has been chopping back and forth since late February since the Russian invasion.
The market currently has overhead resistance at 7.47, that’s the contract high and that’s 13 cents above todays close.
Chart support comes in the low $7 range at 7-7.10 where our uptrend comes into play.
July Soybean Chart
Today’s soybean prices at 7.13 are a new high for the move but not a contract high, that was set shortly after Russia invaded Ukraine at 17.41.
Todays close at 16.98 is 43 cents below the overhead resistance and the contract highs.
Chart support coming in around the 16.25-16.50 level on the July soybean chart.
July KC Wheat Chart
July wheat prices are not challenging the high’s that were posted at 12.59, but keep in mind wheat rallied about $4 and then pulled back. They are still trading about $2.50, which is above where we were at when Russia invaded Ukraine.
Wheat has a double top in the short term at 11.47, that’s 42 cents above todays close with a short-term bottom at about 10.27 and that’s nearly 80 cents below where we are currently trading.
That is the range we are expecting in the near term until USDA’s acreage and stocks report is released on March 31st.
Questions or Comments
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