Even though corn planting is reported

as in its final stages across the Corn Belt,

this may not really be the case. There are

several reports of fields that have been

seeded, but will need to be reseeded,

particularly in the Eastern Belt.

 

This is from the excessive rains

and cold temperatures to which

the crop was subjected. The real

question with this development

is what impact it could have on

total production.

We are at a point in the season

where any unplanted corn

acres are more likely to shift

to soybeans if possible. It

is not out of the question

that some of these acres

could go unplanted this year

altogether. Any change on

planted acres will be debated

right up to the June 30

planting revisions, and likely beyond.

Planting pace is a factor in today’s

market, but so is crop condition. The

initial corn crop rating of 65 percent

good/excellent on corn this year is the

second-lowest start in recent times.

This immediately created a firestorm

of opinions surrounding final yield

potential.

Most analysts claim this will put final

corn yield close to 167 bushels per

acre, compared to current estimates

for a 170-bushel yield. While some are

shrugging these numbers off, history

shows us in the past 19 years, the final

crop rating has only been above the 

initial one time.

While production is the primary focus

of today’s trade, demand remains just

as much of a factor in price discovery.

This is especially the case with corn,

where exports point towards an annual

sales number that will be 160 million

bushels greater than what the USDA is

projecting.

Corn exports could be even higher if

Brazilian farmers withhold stocks from

the global market, such as they have

done with soybeans. The primary reason

this added demand has not impacted

futures more than it has is the large

supply of corn in the United States.

There are just as many questions

when it comes to soybean demand.

Exports remain strong on soybeans

even though it was believed they

would falter as the marketing year

progressed. The lack of movement in

Brazil is the primary reason buyers

have kept coming to the U.S. for

soybean coverage.

Domestic soybean usage is

less than hoped for, though,

and could easily decrease any

increase we may see to soybean

exports. While the United

States continues to see good

demand for old-crop soybeans, concern

is building over the low demand we are

seeing for new-crop beans.

So far, new-crop soybean sales only

total 106 million bushels. With just three

months until the start of the new crop

marketing year, this number should be

almost three times that level. The current

volume of new-crop soybean sales is the

lowest since 2008.

While much of the attention in this

year’s market has been on the Brazilian

soybean crop, just as much should be

on the country’s corn. Brazil produced a

record-sized corn crop this year, which

will allow the country to resume exports.

It is quite likely this will impact U.S.

corn demand, especially with Mexico.

This may not show up until later in the

marketing year, though, as that is when

Brazilian corn exports tend to take place.

Brazil will also impact U.S. soybean

exports for the remainder of the

marketing year. At present the United

States is competitive with Brazil in the

global soybean market. This is not just

from the futures market, but also from

factors such as currency valuations.

This creates a vast amount of moving

parts that the complex needs to closely

monitor.

The United States has a large volume

of unshipped corn sales on the books,

which are starting to be noticed by more

traders. Current unshipped sales on

corn are more than 550 million bushels.

Research from the firm Advance

Trading shows that unshipped corn sales

have only exceeded 500 million bushels

at this time in five of the past 14 years.

As a result, it is not out of the question

that we could see a large volume of sales

either roll to new crop or be washed out

of later in the year.

While we have not heard much about it

recently, trade is still interested in what

is taking place with the El Nino weather

system. We have not seen much change

in the strength of the El Nino lately, but

there are indications it will continue to

increase in power.

According to current models, the El

Nino has a 60 percent chance of reaching

moderate strength by this fall. This has

limited the volume of risk premium

in today’s market, as there is a strong

correlation between El Nino events and

better-than-trend yields.

This spring is going to down as one of

the wettest in both Iowa and Illinois. So

far, the spring of 2017 has been the thirdwettest

in recent times, with 2013 being

the worst. That year the wet conditions

did impact both crop production and

quality in these states.

While we could easily see yields reduced

from the wet soils again this year, futures

tend to be much slower to react to yield

loss in wet years than in a drought.

Karl Setzer is a commodity trading

advisor/market analyst at MaxYield

Cooperative. His commentary and

market analysis is available daily on

radio, in newsprint and on the Internet

at www.maxyieldcooperative.com

The opinions and views in this

commentary are solely those of Karl

Setzer. Data used for this commentary

obtained from various sources are

believed to be accurate.