HOW BIG OR SMALL COULD CORN CARRYOUT GET?

Written By Sebastian Frost

MARKET UPDATE

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Overview

Grains lower across the board, however we closed well off our lows. Most notably in wheat as Chicago closed +10 cents off of it's early lows. Closing down just -3 cents after trading down -13.

Corn and soybeans are seeing a little bit of pressure from rains in the midwest improving the soil moisture situation.

Rains right now will be perceived as a slight negative as we are not yet into planting season. So for now it just helps the moisture.

However two weeks from now and the further we get into planting, rain will be a negative as it could effect planting progress.

Another negative factor the markets saw today was a big headline that we got our first human case of bird flu from cattle. Anytime the market has gotten a headline like this in the past, the grains have been negatively impacted because the headline says less cattle means less grain being consumed by them. Even though the reality is we probably don’t lose any demand. Here is a link to the article.

The dollar rallied to 4-month highs which added some pressure. The dollar is particularly strong against Brazil's current which doesn’t help with competitiveness for US soybeans.

The effects that South America weather will have on their soybean crop is non-existent. However, there is still a very wide range of guesses as to how big that crop is.

The USDA has the crop at 155 vs most estimates closer to 150. One example would be StoneX recently lowered their number to 150.8.

Although Brazil weather won’t matter for the beans, we are still in a key time frame for that second crop corn in Brazil. Right now they are getting rain which is friendly for that crop.

Now that we got the planting intentions report out of the way, the market is going to very soon start paying close attention to US weather and our planting outlook.

The next week will be cool and wet. But it does start to warm up with above normal temps next week.

Precipitation for April is expected to be above average, which could cause some planting concerns. Temps are expected to be warmer than normal as well.

The outlook for this upcoming planting season has really shifted from dry to wet, while heat is expected to remain above average.

Below is two seasonal drought outlooks. The first was released 10 days ago. The second was released yesterday.

Originally they thought that drought would be persisting from now until July, however they now expect drought will be removed in a lot of areas such as Iowa due to this potentially wet spring and early summer.

These rains could go a long way, but the corn crop is made in July. Soybeans are made in August.

The outlook for later summer is still hot and dry.


Subsoil Moisture in Top Growing States

Overall US subsoil moisture is 61% adequate vs last year's 67%

🌽 Top corn grower Iowa's subsoil is 24% adequate vs 69% a year ago

🌱 Top soybean grower Ilinois' is 58% vs 94% last year

🌾 Top wheat grower Kansas is 47% vs 20% last year


Today's Main Takeaways

Corn

Corn gives back part of Thursday's rally.

On Thursday we had the highest daily gain in corn since last July.

In Thursday's report we got the 2nd lowest average number in 6 years as we surprised lower. Coming in at 90 million acres vs the 92 million estimates and near 95 million last year.

Do these numbers have a lot of merit? ……..

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In today’s update we talk about last week’s report, how late or early planting could affect prices, and how big or small this corn carryout could actually be.

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sfrost@dailymarketminute.com

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Sebastian Frost
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