The Rural Voice, 2019-05, Page 55also decline, further limiting their
soybean purchases. When considered
as a whole, there are many factors
that are weighing negatively on
soybean prices. On a positive note,
the most recent USDA report showed
U.S. soybean planted acres falling
this spring.
The USDA released their
prospective planting report on March
29. This report provides the
marketplace with an early estimation
of the U.S. farmers’ planting
intentions for the upcoming growing
season. Following up on the soybean
discussion above, the report showed
growers responding to market prices
and the bearish bean outlook, with
soy planting estimates substantially
less this season. Year over year the
U.S. farmer was forecast to plant
about 4.5 million fewer acres of
beans. Conversely, U.S. farmers
were forecast to increase corn
planting significantly, increasing
acreage just shy of four million acres.
Most notably in the corn planting
intentions, were the states of North
and South Dakota, both increasing
acreage by 900,000 and 700,000
acres respectively. Interestingly,
North Dakota is the state with the
largest planted acreage of principle
crops, with even larger planted
acreage than the mighty agricultural
state of Iowa. Its prospective planting
acreage is about 24.5 million acres.
North Dakota produces more than
half of the U.S. spring wheat and
durum crops. It is forecast to plant
about four-million acres of corn, 6.5
million acres of beans and 6.7
million acres of spring wheat.
Parts of the U.S. corn belt have
been hit with devastating floods.
These floods occurred after the
USDA surveyed farmers for the
planting intentions discussed above.
Due to these floods there are
thoughts circulating that corn
plantings will fall and soy acres will
increase. Regardless of how the mix
might change for planted acres, the
market seems indifferent today, as
prices languish with little volatility.
The bearish (negative) sentiment
towards grain prices is just so
significant that events (such as this
flooding) that once would have
caused markets to rally sharply are
just not impactful to market
speculators at this time. This is
because: grain inventories are high;
U.S. exports face tough export
competition; it’s early in the season;
there is plenty of time for fields to
dry and demand has been reduced.
As mentioned, Chinese demand is
likely to continue to falter and U.S.
interior corn demand has been
reduced as the flooding has idled 13
per cent of the U.S. ethanol capacity.
So will the market eventually be
concerned about production potential
and add risk premiums to the grain
markets? Well the U.S. flooding
story is going to potentially surface
again as of this writing. The Dakotas,
Minnesota and Wisconsin are
forecast to get some heavy snow
accumulation (up to 1.5 feet) in early
April. At this time of year you would
expect melt to occur rapidly and from
this flooding is possible to reappear.
If this occurs are we close enough to
seeding time to get the market to take
notice? Large speculative funds
continue to aggressively short grain
futures and at this time they expect
prices to continue to drift lower.
Producers on the other hand continue
to be light sellers of grain and are
very patient with their ownership.
Will the producer’s patience payoff?
First let’s get the crop planted,
determine acres and from there
summer weather will give us our
answer. However we all know that
history tells us not to necessarily
count a crop in the bin before it’s
even in the ground.
Wheat crop ratings are now being
presented and the U.S. wheat crop
has been improving with the
warming weather. In regards to
wheat, the U.S. ending stocks of soft
wheat continue to fall dramatically
and the carryover will be the lowest
in many years. Some forecasts
estimate that the U.S. SRW crop
plantings are the lowest since 1984.◊
MAY 2019 51
Markets
Deadline for the
June issue of
The Rural Voice is
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