Corn: Corn traded higher today due to better export figures in this week’s export report. Exports were helped by support from the wheat market and due to a lower dollar. Analysts are reporting that corn acres may be higher than what the USDA reported at the Outlook Forum last month. USDA has estimated that the 2016 crop will be about 90.0 million acres. The soil temperature in the Midwest is warmer than it has been the past few years due to a milder winter. This could allow producers to get into key corn growing areas and put in a relatively large crop. We will know more about corn acres once the USDA releases the acreage report on March 31st. Over the past week, September corn futures increased by $0.05 while the average local harvest basis weakened by $0.02.
Soybeans: November soybean futures increased by $0.23 since last Thursday’s market close. In a market like this, that is quite an accomplishment. The cause of the increase appears to be a mixed bag. However, a few things worth mentioning is what has happened in Brazil. Reuters reported that the former President of Brazil, Luiz Inacio Lula da Silva, was arrested on charges of money laundering. This has caused Brazil’s equity markets and currency valuations to increase as people are hopeful for a political change after the arrest. This increase in the Brazilian Real makes their soybean exports more expensive to foreign buyers. Also, if we do experience an increase in corn acres due to the Midwest being able to plant an early corn crop, this will likely come at the expense of soybean acres. If we have less acres, that translates to less supply and possibly higher prices. Again, we will know more once we see the report on U.S. planting intention on March 31st. The average local harvest basis for soybeans declined by $0.01 since last Thursday.
Wheat: The latest USDA progress report showed that the Kansas wheat crop was rated 56% good to excellent. Wheat has traded higher recently due to dryer conditions in the Southern Plains and fears for what that means for the wheat crop located there. Also, the recent weakness in the U.S. dollar has helped wheat exports. July wheat futures have increased by $0.17 since last Thursday while the average local harvest basis decreased by $0.06.
Cotton: December cotton futures closed at 56.70, which is relatively unchanged from last Thursday. Cotton loan options continue to be approximately $0.11 to $0.13 for 2016 new crop. Cotton continues to trade range bound. Cotton has been under pressure over the past month. The National Cotton Council (NCC) held their outlook meeting at the beginning of February. The NCC reported that cotton is suffering due to lower demand, a decline in Chinese imports, lower grain prices, and the relatively strong U.S. dollar. This report was released a month ago. However, the conditions still hold true for cotton. The report indicated that the situation would not likely change in 2016. The National Cotton Councils annual outlook can be found here: http://www.cotton.org/econ/reports/annual-outlook.cfm
Take Home Message: Grain prices have increased by quite a bit from last Thursday. Farmers should be mindful of rallies in prices and not ignore them. It is important that producer compare price levels to their cost of production in order to determine the price target they need to obtain to be profitable. The acreage report will be released March 31st and this will provide the price direction for commodities as we head into the spring planting season. Grain Newsletter 3-10-2016
Grain prices are as of approximately 4:00 PM CST on 3/10/2016. Grain bids, futures, and basis are subject to change. Producers should stay in contact with their local grain buyers and/or cotton brokers for the most updated commodity price information. The information contained in this newsletter is for informational purposes only and does not constitute any offer to buy/sell any commodity.
