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February 26, 2024
Prices updated as of 6:10am CST.
I received many messages about Mar24 corn prices closing below the $4/bushel benchmark on Friday. Nearby prices fell even lower this morning, with Mar24 futures dropping to $3.96/bushel at last glance.
I’m following the May24 corn contract more closely, though. The Mar24 contract is coming up on expiration and while that means it is moving closer to cash prices (which clearly indicate supplies are well-stocked across the Heartland), that has allowed trading volumes on the May24 contract to increase, making it the most actively traded corn futures contract since about the middle of last week.
After some short-covering and bargain buying to close out last week, market focus has again turned to Brazilian crop progress. “With such hefty South American supplies set to seek export sales the debate is now about whether corn can hold the $4 level,” a European trader told Reuters overnight.
Agribusiness consultancy AgRural reported that 73% of safrinha corn in Brazil’s center-south areas was in the ground as of last Thursday, 17% higher than the same period a year prior thanks to a rapidly maturing soybean crop just harvested.
Warm and dry weather across the Center West and South will be favorable for safrinha corn planting and soybean harvest progress, though it could become problematic if it persists beyond the next week. Temperatures are remaining moderate in Argentina and plentiful showers are benefiting crops after a dry spell in recent weeks. Through this week, South American weather is favoring higher production estimates, but that could shift if dryness persists in Brazil in the coming weeks.
Soybean prices also struggled for upward price momentum this morning, falling $0.01-$0.05/bushel which dropped nearby Mar24 prices to $11.315/bushel and most actively traded May24 futures to $11.4075/bushel. New crop Nov24 contracts fell to $11.29/bushel.
Overnight, Brazilian ag consultancy AgRural trimmed its 2023/24 Brazilian soybean production figure, citing dryness in key growing areas of Southern Brazil for the forecast trims. I’m skeptical on these cuts – U.S. soybean shipments are dwindling as Brazilian supplies hit the market so I don’t expect these numbers will move the market significantly today.
But who knows?!
Wheat prices fell $0.04-$0.08/bushel overnight, as pressure from a stronger dollar late last week loomed over the market, despite the fact that the dollar weakened in the early morning hours.
Markets are optimistic that low prices are going to start curing low prices. “There is hope low corn and wheat prices will stimulate more import demand, with South Korea buying wheat from the U.S., Canada and Australia,” a German trader told Reuters.
“The question now is whether the big wheat importers like Egypt, Algeria and Saudi Arabia will return with new purchase tenders this week. But Russian and other Black Sea region prices are still about lowest which means the Black Sea would be the favorite to win new business this week.”
Over the past couple weeks, USDA has released several key datasets, as outlined in my “I’ve been reading…” section below. USDA’s first look at 2024 net farm income was published over two weeks ago now, but there are more insights to be gleaned than my initial take.
Widmar points out that falling levels of working capital make farmers more susceptible to a downward shock in prices, as working capital is typically farmers’ first line of defense against drops in revenue.
“The downturn in working capital isn’t surprising, but the subdued gains, the rapid contraction, and overall low levels are, especially since farm incomes have remained above long-run average conditions,” Widmar explains.
As commodity prices continue their freefall, I encourage you to take a look at this article and possibly examine working capital management strategies currently in place on your operation.
It was sunny, not windy, and in the sixties here yesterday on the Front Range and I savored every second of it! I wore short sleeves on my 10-mile run yesterday and I came back with a sunburn – my first farmer’s tan of the season! Chris and I went out for brunch and lounged on the patio while Miss Stella enjoyed being a wild pup in the backyard. It was a glorious Sunday!
NOAA’s short-range forecasts are projecting one last unseasonably warm day for the Heartland today, with highs in the 60s and 70s and steady wind gusts across the Northern and Western Plains. But the clock is about to strike midnight on our springlike weather.
Beginning this evening, a winter storm system building in the Northern Rockies will move east into the Upper Plains. The system will combine with a separate rain system over the Midwest late Tuesday evening, spreading more precipitation over the Heartland through the second half of this week.
Over the next 24 hours, accumulation in the Northern Plains will likely be light. NOAA is calling for a wintery mix in the region, which shouldn’t top more than a tenth of an inch. The Red River Valley along the North Dakota – Minnesota border could see slightly more accumulation – up to a quarter inch.
Even with some wintery weather this week, NOAA’s 6-10-day outlook suggests it won’t last for long. By early next week, chances for above average temperatures will return to the eastern two-thirds of the country while the West Coast battles below normal temperatures. Moisture outlooks are trending above average for most of the country early next week, with the highest chances lingering over the Upper Plains and Mississippi River Valley.
NOAA’s 8-14-day outlook is projecting warmer temperatures will begin to recede from the Heartland through the middle of next week, albeit only slightly. Cool temperatures will continue to linger over the West Coast and push further east into the Western Plains by mid-next week. Near normal to dry precipitation patterns will move into the Northern Rockies. The Heartland will continue to enjoy above average chances for moisture during that time, though those chances are receding slightly from the 6-10-day forecast.
NOAA updated its 3-4-week outlook on Friday. Through the middle of March, forecasters expect the Heartland and the Pacific Northwest will enjoy above-average changes for higher temperatures, especially in the Great Lakes region, while the Southwest trends cooler than average during that time. The Pacific Northwest will battle dry skies during that period, though above average chances for showers will stretch from the Southwest into the Great Lakes Region and along the East Coast.
S&P 500 futures retreated slightly overnight from last week’s record highs, inching 0.10% lower at last glance to $5,096.25. Traders eagerly digested Warren Buffet’s annual shareholder letter published on Saturday. Highlights included success stories from the recent Japanese stock market high, a tribute to Buffet’s longtime business partner Charlier Munger, and record-setting cash reserves (working capital) as the firm struggles to find fresh new deals available to the market.
What else I’m reading at FarmFutures.com this morning:
Grain market analyst, Farm Futures
Holland grew up on a dairy farm in northern Illinois. She obtained a B.S. in Finance and Agribusiness from Illinois State University where she was the president of the ISU chapter of the National Agri-Marketing Association. Holland earned an M.S. in Agricultural Economics from Purdue University where her research focused on large farm decision-making and precision crop technology. Before joining Farm Progress, Holland worked in the food manufacturing industry as a financial and operational analyst at Pilgrim's and Leprino Foods. She brings strong knowledge of large agribusiness management to weekly, monthly and daily market reports. In her free time, Holland enjoys competing in triathlons as well as hiking and cooking with her husband, Chris. She resides in the Fort Collins, CO area.
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