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Farm Futures survey says farmers favor corn in 2020

Corn and wheat futures finished Friday's session mostly higher, while beans finished lower.

Missed some grain markets this week? Here's what you missed.

Ag marketing IQ

As we progress into spring, the focus will shift toward potential new crop production and away from the old crop balance sheet. At the end of March, USDA will release a Planting Intentions report which will show the intended acres for Corn, Soybeans & Spring Wheat for the 2020/21 production year. About a month and a half later, USDA will release the first official 2020/21 balance sheet via the May WASDE report. This report will use the acres from the Planting Intentions report and will apply a TREND LINE yield to those acres.

With much fanfare a few weeks ago, Chinese and U.S. officials signed Phase I of a trade pact designed among other things, to stimulate exports of U.S. agricultural products to the world’s most populous nation. The soybean market was especially interested in the agreement as using 2017 as a baseline, the deal might result in the U.S. exporting in excess of 1.1 billion bushels with some analysts tossing out volumes on the order of 1.05 bbu in Year 1 and possibly as much as 1.6 billion bushels in Year 2 of the deal. Either would be a welcome improvement from Calendar Year 2018 exports of a meager 303 million as the trade dispute unfolded, and considerably more than the January-November 2019 total of 733 million.

After several weeks of very narrow trading ranges, we did end up with the mini-flush event in corn. In the case of soybeans, this week’s downside probe was nothing more than a head-fake trade. Because of this viewpoint, I am not concerned about this week’s weakness becoming a protracted decline. Current weakness is only temporary, it will not be the dominant theme of the next several weeks.

When searching for market price direction for corn, soybeans, and wheat for the coming weeks, the likely scenario will be quiet trade, with steady to lower prices. The market will hinge around short-term demand loss due to coronavirus concerns, and quite frankly, a lack of fresh market news to excite prices.

Farm Futures survey

According to a January Farm Futures survey, farmers favor corn acres in 2020. Farmers intend to increase corn acreage by 7.68% this year too 96.6 million acres. If these plans hold true, this would be the second largest planting on record, following 2012's total of 97.3 million acres. Farmers intend to plant 4.5 million more soybean acres in 2020 than in 2019. Winter wheat acres planted for 2020 harvest were down 1.14% to 30.8 million acres in USDA's Winter Wheat report.

Market reports

Yesterday, the Dow closed down nearly 1,200 points, sealing the biggest one-day drop in its entire history after worries the coronavirus is spreading and could develop into a full-blown pandemic, coupled with some doubts that the Trump Administration is ill-prepared to handle a large-scale outbreak in the U.S., would that occur. Broad losses in other commodities have applied plenty of headwinds to grain futures this week, and Friday looks to be in store for more of the same. Soybean futures were down double digits earlier in overnight trading, with wheat showing more moderate losses and corn mostly treading water heading into today’s session.

Corn and wheat futures finished Friday's session narrowly mixed but mostly higher, with soybean futures dropping about 0.25% lower on worries about the coronavirus impact on short-term Chinese purchases and overall global demand. Some end-of-month short-covering kept losses partly in check.

USDA reports

USDA turned in a mixed but mostly bearish set of grain export inspection data Monday morning for the week ending February 20. Corn continues to show the most promise for now, coming in at the high end of trade estimates. But wheat fell to the low end of trade guesses, with soybean volume falling to nearly half of the prior week’s tally.

USDA’s latest grain export sales report for the week ending February 20 showed some relatively bearish results for corn, soybeans and wheat – all of which saw a reduction in volume compared to the prior four-week average. Wheat trends were the most positive but still unimpressive after inching 10% above last week’s tally.

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