Weekly Market Recap with Tom's Take May 8, 2020

Corn Emergence 2


July corn futures gained 3 today, finishing at $3.19, up 1/2 for the week. December corn was up 1 3/4 on Friday, but lost a penny from last Friday, ending at $3.35 3/4.

July soybean futures added 6 1/4, to finish at $8.50 1/2, up 1 on the week. November beans gained 7 1/4 Friday, closing at $8.55 1/2, up 1/2 from last week. 

Recently, we’ve been hearing a lot about this elusive “wall of corn” that is still out in the country and is expected to hit the market yet this year. Producers are getting in the position where they are trying to find homes for their 2020 crop while they still have their 2019 grain in the bin. Supposedly, much of this is unsold. There are a lot of questions as to how much corn is left on the farm when it will most likely be coming to market, and at what price. It’s important to remember that, even with sub-par conditions last growing season/harvest, we still produced a crop that was larger than many expected. Could we see a similar or even more extreme story this year, especially if favorable growing conditions continue? While the USDA’s 97 million-acre number from the March planting intentions report seems high, even with something like 94, 95, or 96 million acres, and a trendline yield we could still be looking at close to a 16 billion bu. production number and as much as a 4 billion bu. carryout. Long story short, that is A LOT of corn with an uncertain future. While there are still possibilities for small rallies in the short term, the one we finished this week with due to frost concerns is a great example, it’s important to not lose the forest through the trees. The end goal is to go into harvest without still wondering what to do with your 2019 crop.

While hauling in on free price later this summer frees up your bin space and alleviates quality concerns, there is still the matter of marketing that grain. Also, when you take advantage of the convenience of free price later, you give up the opportunity to forward market that grain, a normal advantage of on-farm storage. Even if you think it’ll be later this summer before you are looking to market the balance of your old crop grain, now is the time to be talking with your local GMA about our marketing programs. We have several programs that allow you to haul now, generate some cash flow with pricing potential into the summer.

Here are some items impacting corn and soybean prices: 


  • Ethanol production rebounded to the best levels in a month for the week ending May 1, producing 176 million gallons, up from 158 million the previous week. Ethanol inventories dipped to 1.076 billion gallons, down from just over 1.1 billion the previous week. Even though ethanol production increased, it was still more than 40% below the same week last year, when they produced 305 million gallons.
  • U.S. gasoline demand continues to increase. Last week saw an average of 6.664 million barrels per day, up from 5.860 million barrels per day the previous week. 
  • Crude oil has been higher 6 of the past 8 trading days. This week, June WTI is up about $5.
  • Export inspections last week were solid at 47.9 mil bu., above market expectations of 33.5-43.3 mil bu., and above last year’s same-week exports of 38.5 mil bu. and were a 4-week high. This also kept us above that 40 million bushel weekly pace we need in order to hit the USDA’s estimate. 
  • We’ve heard of several sales of corn this week into the export channels, with both Mexico and China being reported as buyers for Old Crop and New Crop. There continues to be a story floating around that China is wanting to replenish their state reserves and are looking to buy up to 20 million metric tons. However, the sales we’re hearing reported are substantially below that number. For perspective, recently, China announced their intentions to increase their U.S. corn purchases from 3 MMT per year to 4MMT. Those are more in line with what we’re hearing. 
  • There is talk of frost/freeze this weekend. We’ll see what that does to these young plants. 
  • Corn export sales last week were 30.5 mil bu., towards the lower end of market expectations falling well below the previous week’s strong sales of 53.4 mil bu. and were the 2nd lowest of the last nine weeks.
  • As of last Sunday, Iowa was estimated at 78%. That’s the 2nd fastest on record. We saw 85% in 2010. From the stories we are hearing from many of you, we have to wonder if it wasn’t higher than that. Will we be close to 90% or higher by this Sunday? 


  • The main thing that could drive soy prices higher in the short term is weather this weekend. It appears that much of the state of Iowa will be OK, but what about those bean acres in Minnesota, South and North Dakota that have been planted and sprouted? We’ll know soon. 
  • Longer-term, any and all Chinese interest in soybeans will potentially give some more support to bean prices. Rumors and confirmations of sales have helped quite a bit this week. 
  • With the WASDE report coming up, it also feels like we have seen some short-covering. I would expect to see a little more of that on Monday, depending on weekend weather. 
  • U.S. soybean sales last week were 24.0 mil bu., at the bottom of market expectations and down from the previous week’s 39.6 mil bu.
  • Actual shipments last week, at 11.7 million bushels, were also below expectations, and about half of the number for the same week last year, and well below the pace of 27 million bushels per week needed in order to hit the USDA’s 2020 projections. There is an expectation that the USDA will revise their estimates for old crop soybean exports down by 50 to 100 million bushels in next week’s WASDE report. 
  • As of last Sunday, the U.S. soybean crop was estimated at 23% planted compared to 5% at this time last year. Iowa was seen at 46% planted, compared to 7% last year and 9% on average.
  • The early planting dates increase the likelihood of above trendline yields and most in the trade believe that the planted acreage for beans will be closer to 85+ million acres rather than the 83.5 million acres in the planting intentions report. We probably won’t see the USDA update the acreage numbers until June. 

Upcoming Events:

  • This Sunday is Mother’s Day. Don’t forget to schedule a conference call with “Mom”
  • Next Tuesday, May 12th is the next WASDE
    • We expect to see some revisions to some of the demand numbers 
  • As mentioned earlier, the forecasts for cold temps this weekend have many in the trade on alert. Stay tuned to those actual numbers. Regardless of what actually happens, the markets will react on Sunday night and Monday 

Tom’s Take:

This week, as crude began to rebound a little, and corn prices rallied a little, I started thinking about all of the things that would worry me if I owned a bunch of unpriced corn: 

  • The ethanol industry at reduced production, perhaps through the summer
    • One stat says we’ve already lost 60 million bushels of demand in IOWA alone
    • That production is not coming back – those bushels will eventually need a home
  • Planting progress well ahead of the average pace, especially in Iowa
    • Does that create an even bigger crop? 
  • Potential further disruptions in the livestock sector 
  • A growing ending stocks number for the current year 
    • And the potential for a much bigger number during the summer of 2021 

With that in mind, many of you already know my stance on Free Price Later programs. But, for those that might not remember or haven’t heard me say it yet, I think Free Price Later, from a farmer’s perspective, is the WORST marketing alternative ever invented. It’s a GREAT program for the company buying your grain. All is done for the farmer is to move the responsibility for keeping the grain in good condition to someone else. But, you are still on the hook for every change in price, whether futures or basis. 

However, there are other programs that let you move your grain, generate some cash flow, AND give you pricing potential into the summer. The two that we recommend are Minimum Price and Extended Price. A Minimum Price contract protects you if the bottom falls out of the market due to some major change, and yet gives you the ability to participate if the futures market rallies. Both of these work well for soybeans, too, even though I am focused on things that can and will impact corn prices. 

So, when you stop and think about all of that corn that will move off-farm between now and Harvest, think about timing. If the vast majority waits until we know the crop in the field is in good shape, sometime after pollination, how much time is there between that and the beginning of harvest? 10 weeks, more or less? How many bushels do you think the industry can move in 10 weeks? Certainly not ¼, or more, of the entire crop.

My point is that I think you owe it to yourself to really think about when you are going to move your crop and under what kind of agreement. If you are just going to wait and see what happens, and then use Free Price Later, don’t be surprised if that price moves lower before you are forced to sell it. I’d much rather see you take a proactive approach, learn about a marketing alternative that can work for you, instead of against you. As always, I’d encourage you to talk with your local Grain Marketing Advisor. 

One final thought, a wise person once told me that you can be bullish and still make some sales. The two are not mutually exclusive. That’s not a bad way to end this discussion. 

Tom Guinan (tom.guinan@LandusCooperative.com)

Here is a link to our latest podcast episode: