The market selloff continues this morning as corn is down 4 and soybeans are down 7 due to favorable forecasts for the coming weeks.
Long term the market outlook is higher with US ending stocks expected to decline in the 2018/19 season due to lower acres. Our first look at projections for new crop carryout from the USDA will be released on May 10th. With intentions for lower planted acres we should see a decrease in ending stocks even with trend yields. With corn plantings likely to struggle to reach normal pace in the coming weeks we could struggle to meet trend yields. With a trend line yield of 174 bpa and conservative demand numbers, ending stocks would come in near 1.35 billion bushels with a stocks/usage ration of 9.1% compared with 2.18 billion and 14.8% this year.
My thought is that corn acres increase from the USDA’s March projections if weather forecasts hold true for a couple reasons. 1. The USDA is projecting an increase in wheat and hay acres that I expect to change due to the spring weather in the plains and lower prices for wheat due to world supply and competition from other commodities. 2. The idea of more burdensome ending stocks for this season and even higher stocks next season are weighing on prices. 3. Producers that have yet to lock in sales of soybeans have seen a drop in the soybean/corn price ratio over the last two months.
Producers should be actively placing firm offers with their buyers for new crop sales that are hovering near the $4 range. Take advantage of the down time you have before you head to the fields to talk with your buyers to get targets set for the crop you will be planting. For most producers it is difficult to find time to make sales or put firm offers in once you are busy planting. This is also the time that we could see spikes in the market due to weather issues around the country.
Have a Safe Weekend!