Corn and bean prices rise to the high the week.
Grain futures were mixed to mostly higher overnight, with wheat prices reversing nighttime losses, as French milling wheat opened firm and pushed to new April highs, pulling wheat prices from $0.10 lower to $0.10 higher on the Chicago wheat contract. Concerns continue to grow over the cool/wet forecast, causing some productive Midwest states to miss the critical May 10 marker for optimum yield potential. North Dakota has a preventive plant date of May 25, likely creating some lost corn acres. Given the extreme prosperity offered since the revenue price was set in February, many farmers will still opt to take their chances with the newfound moisture.
There is a misconception that some people think farmers will just throw the corn crop into preventive plant, take the check and look away. That is a mistake, as extreme prosperity that is being offered to the farmer right now to keep pushing and take the risk of his revenue assurance check being deducted by a few percentage points by planting past stated dates. When you can lock in a portion of your crop at $1.50 above the insurance fix, you’d be a fool not to continue to try and plant corn. There will be isolated areas where the crop is just underwater and will not see daylight for a considerable time which will go under the preventive plant feature, but it is likely to be isolated to 500,000 acres or less.
US dollar continues to push higher today, up $0.67, 103.71, just $0.20 away from the highs made in 2017 and 2020. Breaching this will have the US dollar at the highest price in 20 years. The strength in the US dollar is part of the recent drag on US grain prices over the past month, as strength in the US dollar of 1% increase equates to the price of grain rising 1% even if it remained stagnant.
Central and Midwest weather remains cold/damp, with conditions prevailing from the Northern Plains to the upper Midwest. The forecast remains chilly/dry until Friday, when wet weather returns. Heavy rains will again return the Northern Plains southward to Arkansas and then eastward into Ohio with 10-day rainfall totals of 2.00-4.50”. Three storm systems will cross the Central US over the next ten days, with the 11-15 day forecast into mid-may also taking a wetter turn. Flooding will become commonplace in MO, ND, SD, and SW IA. There is a chance that rains will push across Northeast and North Kansas, with some stability coming to what is almost now a maturing HRW wheat crop.
Dryness in the winter corn crop in South America remains a concern. A vast area is in pollination, having seen no measurable precipitation for two weeks, and the forecast through May 8 is void of any moisture. The only consolation is that temperatures are not oppressively hot, with temperatures in the 80s/low 90s. Seasonally moisture in the safrinha corn region goes to zero in May-June, where the secret to growing corn in this region on a second crop was abundant rains which typically take care of the crop in March and April.
Heavy losses yesterday in live cattle put them back to near Monday’s lows, feeder cattle made new lows for the move this week on rising feed values. April live cattle futures expire tomorrow and will stay tied to the cash market. The cash trade was light on Wednesday, with southern deals steady with early week action at $140. Box beef prices were lower at the close, with choice off 2.26 while select declined by $3.91. The movement was light at 160 loads. The cattle markets and becoming victim to the larger cattle number picture that the USDA revealed on Friday, and charts have broken down technically confirming tops for the summer contracts, while the upcoming winter contracts are getting their bullish momentum corrected. Nearby technical support for June cattle is at trendline support doubled by the 78% Fibonacci retracement value at 134. 00. Breaching that area targets the April low at 132.50.