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Market Forecaster: Record planting pace effects soybean markets

Market Forecaster: Record planting pace effects soybean markets

Tractor uses big paintbrush

A tractor creates unintentional art off U.S. Highway 12 and County Road K north of Middleton in Dane County, Wisconsin. The farmer was planting corn during a short break of clear skies. 

Corn closed the week 5 1/2 cents lower. Private exporters did not announce any export sales.

In the weekly export inspections report, exports, for the week ending April 23 were 42.4 million bushels, slightly above the average needed pace of 40.2 million bushels per week estimated to reach the USDA’s 1.725 billion bushel export projection, with four of the last five weeks having done so. Cumulative exports of 878 million bushels are still down 36% from last year’s 1.364 billion as they continue attempting to claw back to the USDA’s 16.5% year-over-year decline projection.

In the weekly crop progress and conditions report, U.S. corn planting jumped to 27% complete versus 22% expected, 7% last week, 12% last year and 20% average. Key states of Iowa was 39% done, Illinois was 37%, Nebraska 20%, Minnesota was at 40% and Missouri 25%. Normal pace for next week is 39%.

In the weekly U.S. Energy Information Administration report, ethanol production for the week ending April 24 declined again, falling to 537,000 barrels per day from 563,000 bpd the week prior and was nearly 48% below last year’s same-week production of 1.024 million bpd.

Ethanol production over the last three weeks averaged 46% below last year. Based on the week’s ethanol production, ethanol demand for corn was 54.4 mb the previous week versus 102.1 mb last year. This brings the 2019-2020 marketing year-to-date total corn for ethanol usage decline to an estimated 173 million bushels.

Strategy and outlook: Rapid planting pace and likely the second largest planted acreage in history leaves a bearish supply scenario at a time when ethanol demand is sliding due to the closing of the economy. Until the economy opens back up and energy consumption returns to more normal patterns, which likely won’t be until late summer, corn usage will remain subdued and old crop stocks swell. The fundamentals suggest to sell this market on weather related rallies with a drought the best chance for a long term rally.

SOYBEANS --------------------------------------

Soybeans closed the week 11 1/2 cents higher. Private exporters announced sales of 264,000 mts to China and 108,864 mts to Mexico.

In the weekly export inspections report, exports of 20.4 million bushels, again below the roughly 26.2 million bushels per week estimated to reach the USDA’s 1.775 billion bushel export projection, now reflecting the 10th consecutive week in which exports failed to reach the “needed” pace. Cumulative exports of 1.23 billion bushels are still up 6.1% from last year’s 1.159 billion, while USDA is estimating 2019-2020 exports 1.5% higher than last year. Soybean exports from this point forward last year averaged 28.9 million bushels per week.

In the weekly crop progress and conditions report, planting was 8% complete versus 8% expected, 2% last week, 2% last year and 4% average. Iowa is 9% done, Illinois is 18%, Indiana is 11%, Minnesota is 5% and Nebraska is 8% done. Normal pace for next week is 11%.

Strategy and outlook: Producers are actively seeding this year’s soybean crop at a near record pace. The fast planting pace and increased soybean acres leaves a potentially bearish supply situation without the aid of strong export demand. The cash on trade report has turned decidedly bearish to the soybean market. The fundamentals suggest to sell this market on weather related rallies with a drought the best chance for a long term rally.


Chicago wheat closed 17 cents lower. Kansas City wheat three-quarters of a cent lower and Minneapolis wheat 6 1/2 cents lower. Exporters did not announce any sales.

In the weekly export inspections report, wheat exports were 18.4 million bushels, falling below the roughly 25.5 million bushel per week average estimated to reach USDA’s 985 million bushel export projection with only five full weeks remaining in the 2019-2020 marketing year. Cumulative export inspections of 867 million bushels are up 5.1% from last year’s 787 million, in line with the USDA’s year-over-year projected gain, but have been slipping relative to last year having been up more than 10% as recently as late February.

In the USDA crop progress and conditions report, spring wheat planting is 14% complete versus 18% expected, 7% last week, 11% last year and 29% average. Most of the progress remains in the Pacific Northwest with Washington 88% done and Idaho is 61% complete with Minnesota 6%, South Dakota 36% and 5% done in North Dakota. Next week’s normal pace is 43%.

Winter wheat conditions surprisingly dropped to 54% good or excellent versus 57% expected, 57% last week and 64% last year. All three classes conditions declined last week. Missouri improved 3% to 53% good or excellent; Illinois dropped 5% to 63%, Kansas down 6% to 40%, Oklahoma declined 3% to 62%, Texas down 1% to 57% and Nebraska down 5% to 64%.

Strategy and outlook: Demand is forecast to be poor in the second half of 2020 as Russia, the Ukraine and Australia all have larger crops than last year. This will hurt U.S. exports in the last half of 2020. This leaves supply rallies as the best marketing opportunities for producers.

LIVE CATTLE ------------------------------------

Live cattle closed $5.00 higher while feeder cattle closed $1.50 higher. Light fed cattle cash trade occurred at mostly $94 to $100 live and $150 dressed, steady to $10 lower than the last week.

The Fed Cattle Exchange Auction had 4,484 head listed for sale in 38 lots. 818 head sold in six lots. Texas sold 225 head at $95.50. Nebraska didn’t sell anything, Kansas sold 174 head at $100 and Oklahoma sold 185 head at $100.

USDA steer carcass weights were up 3 pounds compared to the prior week at 889, making them 32 pounds above last year. Net sales of 9,400 mts was reported for 2020.

Strategy and outlook: Boxed beef soared to new highs as reduced slaughter continues to plague the industry. Once the packers find a way to increase kills in a safe manner, slaughter levels will increase and lead to a strong cash market into summer.

HOGS ----------------------------------------------

Lean hogs closed the week $11.37 higher. Iowa and Minnesota weekly hog weights for week ending April 25 saw weights at 286.1 pounds vs. 285.8 pounds last week and 286.1 pounds last year.

Last week’s net sales of 50,300 mts was reported for 2020 with pork shipments at 44,700 mt. China bought 35,100 mt, while taking shipments of 20,700 mt.

Strategy and outlook: The lean hog market has very strong export demand and surging product values. Once packers can find a way to stay open amid the coronavirus concerns and work through existing supplies cash markets will have an extremely strong rally.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. The home office is in Springfield, Mo., with branch offices in Thief River Falls, Minn.; Verona, N.D.; Yankton, S.D.; Storm Lake, Iowa; and Springfield, Neb.

The Tri-State Neighbor Weekly Update

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