89.5 Million Acres Of Corn Projected To Be Planted
DAVID REINBOTT
BENTON, MISSOURI
The wet weather the past couple of weeks has kept many farmers out of the fields to plant corn. It does look there will be a break in the weather this coming week to get some corn planted. That maybe one reason corn prices pulled back last week. However, it may be short lived as the 8-14-day forecast released on Sunday is projecting above normal precipitation for Iowa, Minnesota and South and North Dakota.
It looks as if many of the corn acres will have to wait until May to be planted.
With 89.5 million acres of corn projected to be planted, ending stocks could drop 200 to 300 million bushels to 1.1 to 1.2 billion bushels compared to the beginning stocks at 1.44 billion bushels. This assumes a yield of 179 to 181 bu./acre. However, if the yield is 177.0 bu./ ac., the same as last year, ending stocks could drop below 1.0 billion bushels. If weather cooperates and corn acres go up 1.5 million to 91.0, we add 200 million bushels to the ending stocks. The ending stocks are still tight but there is some cushion. With all the uncertainty about demand for ethanol, feed, and exports, the use could be trimmed 200 million bushels and the ending stocks could increase 1.4 to 1.7 billion bushels depending upon yield. Now the ending stocks are not nearly as tight.
As I mentioned above, demand will have a big impact on new crop ending stocks. With fewer animals on feed and higher corn prices, feed use could go down. Also, the high cost of fuel is making summer vacations and travel more expensive. This could result in less corn needed to make ethanol. However, corn exports could go up significantly due to Ukraine and their uncertainty in both production and exports. The safrinha corn crop in Brazil looks to rebound after a disaster last year from both a drought and freeze. There are reports that the rainy season may have ended a sooner than normal and may have trimmed production. The crop will need to be watched because it will compete with the U.S. In the export market.
Soybeans
If all the soybean acres are planted as projected, the ending stocks for the 2022-23 marketing year would go from under 300 million bushels to over 500 million bushels depending on yield. Again, acres planted, weather at planting and during the growing season, and the size of the soybean crop from South America will all have a big impact on supply and ending stocks. The South American soybean crop started off poor with the drought in the Southern regions of Brazil. However, in the rest of the Country, the soybean crop looks good. Also, the demand for biodiesel and renewable diesel that is made from soybean oil and other vegetable oils will have a big impact on soybean ending stocks and prices. While this may not directly impact the near-term prices, it could have a bigger impact in 2023 and beyond.
Wheat
The wheat in the western growing regions continue to battle drought and its impact on both harvested acres and yields. With the stronger spring wheat prices, it could result in the switching of some the soybean acres back to spring wheat in some regions. Exports need to improve and there is always that surprise that a Country will step in and buy U.S. wheat.
Cotton
I will be watching the cotton acres that will be planted and harvested in Texas. Their planted acres are going up but they are also still in a drought. This means the acres that are planted may not be harvested if the drought persists. This will have a big impact on supply and ending stocks.
Rice
The price of rice has held together pretty well. A few hundred thousand acre change in planted acres can have a big impact on the U.S. balance sheet and ending stocks.
Government Polices, Ukraine/Russia, Inflation, weather, etc.
In Ukraine, it will be important to see how many acres of the spring crops get planted. There are reports that spring crops are getting planted but the question is will they make it to harvest and is so will there be an infrastructure to transport the crops to market and into the export channels.
There is talk about changes in the biofuel polices to fight inflation.
I am not sure how all this will work out but it will have impact if implemented. Inflation and its impact on consumer spending and business spending will have a big impact on economic growth.
Recession is mentioned more and more due to the inverted bond market with the short-term bonds offering a higher return than the longer- term bonds. History indicates that when this occurs it signals a recession within 12 months. We will have to see if history repeats itself.
Weather in the U.S. growing season will have a huge impact on production, ending stocks, and prices. We always need to continue to watch China. There are concerns about a slowing economy due to COVID and problems in their livestock industry and their demand for feed.
On April 21, the National Weather Service updated their summer forecast. They are forecasting above normal temperatures and below normal precipitation for the western growing regions. However, this forecast is moving the hot and dry weather further west than earlier forecasts. This may not negatively impact states like North Dakota and Iowa as much as earlier forecasts. For the eastern regions the temperatures are forecasted to be normal and the precipitation to be normal to above normal. We could have a season much like last year where the west suffers through a drought and the east had good growing conditions. It is important for the U.S. to get trendline or above average yields to meet the U.S. and world demand.
Pricing opportunities
Because of all the unknows, it makes marketing the old crop and new crop very challenging. The historical seasonal price trend is for prices to peak as we enter the spring planting season (March – May).
Therefore, taking advantage of the good prices being offered by scaling in sales is still a wise choice. A farmer could also use a close below an important moving average or price support level to make some sales. For the new crop, scaling in a few sales is not a bad idea either but have price floors under the market if prices do turn lower.
Technically, I like to use trend lines to determine price support and resistance levels. From there, I use the moving averages for more intermediate to short term price support levels and pricing opportunities. For buys and sell signals, I use candlestick patterns and signals. I have found that closes below the 8 and 17 EMA are good signals to make sales when used in conjunction with the other technical indicators and make buys when prices close above 8 and 17 EMA.
Technical Analysis – April 24, 2022 for Corn, Soybeans, Wheat, Cotton and Rice.
Corn
July 2022 futures last week stalled out around $8.10 and on Friday pulled back to the 8 day EMA at $7.88. The slow stochastics price momentum indicate is starting to roll over from the overbought level and can be a signal of weaker prices going forward. The price support levels below $7.88 are at the 17 day EMA at $7.71, the 34 day EMA at $7.44, and the old resistance at $7.40. The next major price target above $8.10 is the high that was set in August during the drought in 2012 at $8.44. If you still have old crop corn, scaling in sales every week especially on any big up days would not be a bad idea. Another strategy is to make sales if prices close below a major moving average and especially if prices close below $7.71.
December 2022 futures topped out on Tuesday at $7.55 and on Friday closed below the 8 day EMA. The next price support level is only a few cents a way at the 17 day EMA at $7.18. The next price support levels are at the trend channel at $7.05 and the 34 day EMA at $6.90.
The slow stochastics and RSI price momentum indicates are starting to roll over from the overbought level which can be a signal of a pullback in prices. From the monthly chart the next resistance is at $8.49 from August 2012. As you can see from the chart, the moving averages have been good price support on any pull backs and prices have been in an uptrend price channel since February. Prices will remain volatile with the uncertainty of the planted acres in the Ukraine and the U.S. and the corn production from South America. For new crop sales, I would use a close below either the 17 day MA at $7.18 or the trend channel at $7.05.
Soybeans
July 2022 futures are in a trading range since February between $15.60 and $17.20. Friday’s price action looks negative with a possible bearish reversal and a close at the 8 day EMA at $16.88. The next price support levels are not far away with the 50 day MA at $16.39.
The slow stochastics price momentum indicator is rolling over from an overbought price level which could signal more price weakness. The next price target above $17.41 is $17.95 from September 2012. The South American crop may have stabilized and there is concern about the demand in the short term. For old crop soybeans, scaling in sales every week or make sales on a close below $16.50.
November 2022 soybean futures on Friday rallied to $15.40 but closed 27 cents lower for the day and also closed below the 8 day EMA at $15.11. The next major price support is at the 50 day MA at $14.71 and then at the bottom of the trading range at $14.05. The next price target above $15.40 is $17.89 from September 2012. The slow stochastics price momentum indicator is rolling over from an overbought level which could signal more price weakness. With projections of more soybean acres planted this year, uncertainty in Ukraine, and planting weather, prices will be very volatile. A close below the 50 day MA or the $14.05 price support would be a signal to make some new crop sales.
Wheat
July 2022 wheat futures hit price resistance at $11.35 and has rolled over. The next price support is at $10.22 followed by $9.68. Price resistance is at $11.35 followed by $12.78. Exports remain slow. I would use prices in the $11.35 to $10.22 price range to make additional new crop sales.
Cotton
July Cotton futures made a new high last Tuesday at $1.45. But prices have pulled back to support at $1.37. The next price support levels are at 1.30 and $1.22. Price resistance is at the contract high at $1.45 and the life time high is at $2.27 from March 2011. In the near term, if old crop sales need to be made, I would use a close below the 17 day EMA and the price support level at $1.37.
December Cotton futures held price support around the $1.02 price level in early March and have moved higher and made a new high on Monday at $1.18. The 8 day EMA has been good support on any pull back and is presently at $1.14. The next support is at the 17 day EMA at $1.12. There is still a lot of uncertainty in the markets including acres to be planted in 2022 and the world economic growth going forward. For new crop sales, I would recommend a close below either the 8 or 17 day EMA.
Rice
July rice futures since March, have traded in a price range between $16.90 and $15.80. From the weekly charts the next resistance level is at $17.85. If you need to make old crop sales, I would either use a close below the 17 day EMA at $16.35 or the 34 day EMA at $16.20.
September rice futures the past two week have trended sideways between $16.08 and $15.80. There is miner support at the 17 Day EMA at $15.93. A close above $16.08 would allow prices to challenge the high at $16.30 with the next highs from the monthly charts at $18.25. Price support below $15.80 is at the 34 day EMA at $15.69 and at the 50 day MA at $15.40. ∆
DAVID REINBOTT: Agriculture Business Specialist, University of Missouri Extension