Nate Bruce, Farm Business Management Specialist, nsbruce@udel.edu
Written 4/24/2024
Corn prices have swung in a $0.10 – $0.15 range across all futures during the month of April. This trend is likely to continue until new crop estimates are released in next month’s USDA report. As of this writing, December corn is above $4.70 per bushel. Depending on local basis levels, the opportunity to sell $5.00 new corn could present an opportunity to sell bushels above breakeven depending on expenses. More than likely $5.00 is well above breakeven for most dryland production and could be close for irrigated acres depending on own expenses and land charges. Cheaper corn prices have upped the demand side of corn and is built into market prices at this point. Be prepared for weather situations to result in market rallies and prepare for difficult markets in the months to come. Soybean prices took a nosedive across futures after the USDA Prospective Plantings report was released. Soybean prices have recovered in the last week across futures but have come nowhere close to the prices prior to Prospective Plantings. Brazilian soybean crop uncertainty looms over the market currently. Brazil’s version of USDA, CONAB, estimates the country’s soybean production at 146 million metric tons while USDA’s estimate remains at 155 million metric tons. Why the two estimates are so far apart is extremely difficult to understand. Bearishness in the soybean market could certainly dissipate if the low estimate is correct. Wheat prices appeared to reach a market bottom during the month of April across futures, only to rally as the month progressed. July 2024 wheat had jumped to $5.90 per bushel as of this writing, after bottoming out near $5.50 per bushel. Depending on your location, local basis can be an issue for wheat prices. This could change only if quality issues occur in other major Mid-Atlantic growing regions around harvest, much like what was experienced across Delmarva last year.
USDA’s Prospective Plantings report was released on March 28th. The report moved corn prices higher and soybean prices lower upon its release. Producers surveyed intended to plant 5% less total corn from the previous year for a total of 90 million acres. Intended soybean acreage was estimated to increase by 3% from the previous year, up to a total of 86.5 million acres. The downtrend in wheat prices was surely represented in the report with producers surveyed intending to plant 4% less wheat from the previous year for a total of 47.5 million acres. Locally, Delaware producers intend to plant 3% less corn in 2024 with a reduction from 175,000 acres to 170,000 acres. Maryland producers intend to reduce corn acreage by 2% in 2024, from 480,000 acres to 470,000 acres. The intended corn planting decline is steeper in Virginia where producers expect to reduce corn acreage by 5%, from 495,000 acres to 470,000 acres. Delaware producers intend to plant 3% more soybeans in 2024, from 150,000 acres to 155,000 acres. Interestingly, Maryland producers intend to plant less soybeans in 2024 than in 2023 at 3% less acres, from 470,000 acres to 455,000 acres. Virginia producers intend to increase soybean acres by nearly 9% from 580,000 acres to 630,000 acres. Wheat price decline certainly is correlated to intended decreases in wheat acreage in all three states. Delaware producers intend to reduce wheat acres by 12.5% from 80,000 acres to 70,000 acres. Maryland producers intend to reduce wheat acres by 4% from 340,000 acres to 325,000 acres. Virginia producers intend to reduce their wheat acres by 22.5% from 200,000 acres to 155,000 acres. It should be noted that the USDA’s Prospective Plantings report is never the final say on what plays out during the growing season. Going back 24 years of USDA’s March Prospective Plantings and final acreages for corn and soybeans, it is evident producers change their planting intentions between pre-planting and final harvest. Not one time in the last 24 years has the March Prospective Plantings Report matched post-harvest reports for corn and soybeans, meaning USDA revisions are more than likely coming. The bottom line is this: history has shown time and time again that acres can change drastically.
The April USDA (World Agriculture Supply and Demand Estimates) WASDE report was published on April 11th. WASDE estimated increased domestic demand, feed and residual demand, food and seed demand, ethanol demand, and export use totals. Beginning stocks, production, imports, and exports were left unchanged from the March estimate. Ending stocks decreased by 2.3% from 2172 million bushels to 2122 million bushels. The farm season-average price fell from $4.75 per bushel to $4.70 per bushel. The estimated yield per acre remained unchanged at 177.3 bushels per acre. The April USDA WASDE estimated decreased soybean imports, exports, seed demand, and residual use. Beginning stocks, production, crushing and crushing demand were all left unchanged from the March estimate. Ending stocks were projected to increase by nearly 8% from 315 million bushels to 340 million bushels. The farm season-average price fell from $12.65 per bushel to $12.55 per bushel. Estimated yield remained unchanged at 50.6 bushels per acre. The April USDA WASDE estimated decreased wheat imports, feed and residual demand, and export use totals from the March estimate. Beginning stocks, production, food demand, seed demand, and exports remained unchanged from the March estimate. Ending stocks increased by 3.7% from 673 million bushels to 698 million bushels. The farm season-average price fell from $7.15 per bushel to $7.10 per bushel. Expected harvested yield per acre remained unchanged from the March estimate at 48.6 bushels per acre.
Brazil’s soybean crop exceeded 160 million metric tons last year to meet rising global demand. More than likely, the world’s top exporter of soybeans will have a smaller soybean harvest this year due to unfavorable weather conditions. As mentioned earlier, USDA and CONAB estimates for the soybean crop differ by about 8 million metric tons. Some private analysts think Brazil’s soybean crop is even smaller than the CONAB estimate itself. With Brazil pivoting itself as the world’s top agricultural exporter, some analysts predict producers in the country may still increase the amount of tillable acres, perhaps even by 35%. The second corn crop (safrinha) could expand, potentially allowing Brazil to challenge the United States as the world’s top corn exporter as well. China, the world’s second largest corn producing country, recorded a record corn crop last year at 288.8 million metric tons. China is striving to increase this number by 50 million metric tons by 2030 due to conflicts and tensions between trade partners. In addition, China opportunistically purchased 20 cargo loads of feed grain from the international market in February as prices hit their lowest levels in three years. Alternative grain export routes that have been implemented after Russia pulled out of the Black Sea Grain Initiative last year have allowed the country to remain a top grain exporter. Before the Russian invasion, Ukraine exported about 6.5 million metric tons of corn every month. Thus far this year, Ukraine exported 5.2 million metric tons in March, 5.8 million metric tons in February, and 5.3 million metric tons in January. There have been issues with neighboring countries, particularly Poland up to this point. However, Ukrainian grain is reaching the world market. Russian wheat exports have increased since the beginning of the conflict. A wheat bumper crop in the country and increased exports has had a drastic impact on global wheat prices across the world.
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