New crop corn ends the day much stronger | Thursday, May 12, 2022

The USDA report ended up favoring the bull camp today. Wheat was the biggest winner as prices ended the day up 57¢ to 65¢. A decrease in world ending stocks combined with wet forecast for the Dakotas and Minnesota, and dry in the southern Plains were enough to awaken the bulls (or scare the shorts).

Corn prices ended the day much stronger in new crop. December was up 18¢ at the close while July was quietly 3¢ better. Soybeans were about 8¢ better on the day, but that was well off the intraday high. The charts look considerably better for the grain bulls after the report today, but will that momentum continue tomorrow?

Livestock prices did not like the price action post USDA report in the grains. Feeder cattle fell nearly $3.50 while live cattle were down $1.50. Lean hogs fell to new lows for the decline and are now at the same level seen mid-January. 

The U.S. dollar is now up 0.98 points at 104.85. The bullish momentum continues to grow after new highs were hit this week. Crude oil was able to remain positive after a rough start to the day. June crude was trading near 106.90, up $1.19 just before 3:00 today. 

Midday Comments: 12 p.m.

Today’s USDA report had some friendly surprises. Corn yield pegged at 177 bushels per acre was the biggest surprise. Traders were expecting them to use the 181 target that was released in the February Ag Outlook Forum. Soybean yield was pegged at 51.5 bushels per acre, which was the February number. All wheat production was below the trade guess, resulting in a bullish move for prices.

Corn is up 5¢ on July and up 13¢ on December. Soybean futures are up 8¢. Wheat futures are up 35¢ to 42¢.

New crop U.S. ending stocks for corn was pegged at 1.36 billion bushels, slightly higher than estimates. Soybean ending stocks for new crop were reported at 310 million bushels, slightly below the trade estimates. Wheat ending stocks was below the traders’ estimates. 

World ending stocks for new crop shot higher to 305 million tons from the trade estimate of 296.9 million tons. Soybeans were also higher at 99.6 compared with the estimate of 97.2 million tons. Wheat was the most friendly at 267 vs. the estimate of 272.  Much of the wheat decline came from adjustments to Ukraine production. Traders feel there could be further downward adjustments to that number but will need more time to see what happens. 

Crude oil found buyers midday as prices are now $1 higher. The U.S. dollar continues to remain strong, up 0.87 points. The stock market has recovered some of the early session losses in a volatile trading day.

Opening Comments: 9 a.m.

Corn prices are either side of steady after the opening bell this morning while soybeans are down 12¢. Wheat futures are down 2¢ to 4¢.

The corn bulls were glad to see a daily export sales announcement to China this morning totaling 612,000 metric tons. The weekly export sales report was poor as corn, soybeans, and wheat etched marketing year lows for old-crop sales. 

USDA report is slated for release today at 11:00 a.m. CT. The estimates for U.S. ending stocks for this morning’s report suggest we will see corn and wheat stocks declining with soybean supplies increasing for old crop. New crop estimates will likely be made from acreage data in the March Planting Intentions report and trend line yields. Even though there are valid reasons for making changes to those parameters given the start to the growing season, the USDA is not known for making changes too early.

National agricultural agency Conab released updated production information this morning for Brazil. Most notably, it increased the corn production of the second crop, even though the country has faced some recent dryness. The soybean crop also got larger, but it is still well below the record production from the prior year. 

The U.S. dollar has pushed to another new high for the recent rally. June futures are trading at 104.55 this morning, up 0.67 points. Crude oil is down 16¢ at $105.55. The S&P futures are down 38 points, and the Dow Jones futures are down 224 points. 

About the Author: Bob Linneman is a commodities broker with Kluis Commodity Advisors. Linneman grew up on a diverse farm in eastern South Dakota. Between milking cows, managing a beef herd, and farming various crops, he experienced many aspects of agriculture firsthand. After graduating from North Dakota State University with a degree in business, he moved to Hawaii with his wife. There he was an associate portfolio manager for a fixed income firm that managed $2 billion in assets. After nearly two years in Hawaii, he moved back to the Midwest and began his career in commodities. Linneman is licensed as a Series 3 and Series 30 commodity broker.