Howdy market watchers. Storm season is here, it seems. Just as we were starting to get concerned about potentially hot and dry conditions, active weather returns with rain and hail threats and evening low temps still dipping into the high 30s.
It’s the time of year to be weather aware and ensure you have hail insurance coverage in place on this relatively promising and increasingly valuable wheat crop. Call Sidwell Insurance to update your coverage, including on newly planted corn and green snap protection as it emerges. Rain chances return mid to late this week after fairly widespread activity on Friday. We will always take the moisture this time of year when it really starts to count.
Winter wheat conditions reported Monday, the first of now weekly reporting, were historically average, although below the last two years at 53% Good-to-Excellent. Oklahoma’s ratings were up 9% week-on-week at 50% versus 73% last year. Kansas was rated at 46% Good-to-Excellent up 4% on the week versus last year’s 58%.
As producers finish topdressing and begin applying fungicide, check your fields for green bugs as we’ve heard reports of some sightings.
After a lackluster start to the week from last Wednesday’s Prospective Planting reports that sent corn and bean futures contracts limit up, markets were on the move again by mid-week. A weaker U.S. dollar, expectation of tighter stocks in Friday’s USDA monthly WASDE and Crop Production reports, renewed corn buying as well as wheat purchases by China and talk of more wheat being fed due to corn shortages and prices, got the grain markets moving again. New highs were established in corn ahead of Friday’s 11 a.m. release with front-month May futures reaching $5.95. December new crop futures peaked just below $5.04 before closing slightly above $4.96. November new crop soybean prices slipped on increased production in Brazil and Argentina versus expectations, as well as higher global and U.S. stocks, although remaining historically tight, to close at $12.63, down 10 cents on the day. The USDA left China corn and bean imports unchanged.
U.S. corn stocks were below already reduced expectations and slightly lower globally. Stocks-to-use ratio lowered 1.1% to 9.2%. South American production for corn was, however, increased versus average trade guesses. Argentina’s corn harvest remains behind last year as well as the five-year average, while soybean harvest will start in a couple weeks. Brazil’s soybean harvest is still behind last year, but right in line with the five-year average. The first crop corn harvest is slightly behind last year, but also in line with the five-year average, while the second crop corn planting is finished.
Forecast U.S. average farm prices were kept unchanged for wheat at $5.00 and corn at $4.30, while increasing $0.10 for soybeans to $11.25. With U.S. planting just getting started, market attention now will watch planting progress and any potential planting delays. Rain chances for U.S. corn areas are best in the 11-15 day timeframe. Cold temperatures are expected to return to the Southern Plains winter wheat area next week, but it’s looking like temps may remain above levels of major concern for jointing wheat. Dryness in South Dakota also is a concern for wheat. We’ve seen the Minneapolis wheat futures surge 58 cents this week. With corn carryover remaining tight, feed demand for wheat may be one of the bigger supporters of a continued rally in the wheat market. If we break through the $6.02 ½ level on July KC wheat, we likely will be heading to the 50-day moving average at the $6.14 area.
With the bulls back in the grain markets, feeder cattle prices need to be protected. That move started in Friday’s session with the firmer undertone of USDA reports for the grain market. Front-month April feeders lost $2.375 per cwt on Friday to finish the week at $144.750. May feeder futures closed just below $150.000. On the charts, watch that 20-day moving average that if we break, we’re likely going lower. Live cattle futures eased slightly Friday as well after a nearly two-week climb. With higher corn, we could see higher fats, so consider positioning on the long side of deferred live cattle contracts. October live cattle closed the week at $125.700, down $1.350 on Friday. Cash trade on the week was $118-$122 in the south. Boxed beef prices are higher as demand remains firm from hopes of a reopening economy.
New highs in the equity market this week with a final surge to end Friday’s session has increased optimism for a sustained recovery. A continued flow of stimulus from the federal government has led to higher inflation expectations, although the Fed has remained committed to tolerating an average inflation rate higher than 2% before taking action. For now, this recipe is working and should keep capital flowing, although companies remain cautious over greater inventory and investment commitments unsure of how real the recovery is as additional COVID outbreaks return in Europe and in pockets around the world such as India.
If you would like to lock in these futures levels through a Hedge-to-Arrive contract, while leaving the basis open and most importantly, not having to decide the delivery point. You have the ability to fully negotiate the basis with whatever delivery point you choose when you’re ready, give me a call as I have a new solution for producers to do exactly that. This is a creative solution to lock in futures without having to pay margin calls, but also have the freedom to negotiate the basis with delivery points once you are ready. This is product is nationwide and not limited to our immediate area. If you’re ready to trade commodity markets, give me a call at (580) 232-2272 or stop by my office to get your account set up and discuss strategies to pursue your objectives. Self-trading accounts are also available. It is never too late to start and there is no operation too small to get a risk management and marketing plan in place.
Remember, I am on-site at the Enid Livestock Market on Thursday, sale day. Wishing everyone a successful trading week.
Sidwell is a Series 3 licensed commodity futures broker and principal of Sidwell Strategies. He can be reached at (580) 232-2272 or at brady@sidwellstrategies.com. Futures and options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at http://www.sidwellstrategies.com/disclaimer.
The Link LonkApril 11, 2021 at 05:30PM
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USDA further tightens corn balance sheet | Ag / Energy | enidnews.com - Enid News & Eagle
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