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Prices updated as of 7:00am CDT.

Good morning!

And a very happy belated Mother’s Day to all of you human and fur moms out there! I hope your babies spoiled you yesterday and made you feel extra loved! Stella decided to take a nap on the patio table to remind me of the true hierarchy of our house, regardless of what day it is.

“Mom, look at me. LOOK AT ME. I’m the captain now!” Stella, probably.

My Colorado Avalanche fell to policy editor Josh Baethge’s Dallas Stars on Saturday night. The Avs are now down 1-2 to the Stars ahead of tonight’s Game 4 in Denver. But Josh declared yesterday that there would be “no trash talking out of respect to dog moms,” so I am grateful for a temporary truce!

WASDE Recap

I am still unpacking all of the data published by USDA in last Friday’s WASDE reports, which provided the first look at 2024/25 global production and usage estimates. The report was largely received as bullish by the markets initially, though this morning’s flat price activity suggests the markets are taking larger U.S. new crop supplies into more serious consideration.

I’m going to provide some of my first impressions of the report here but keep an eye on our website in the coming days for more analysis of Friday’s reports.

USDA rarely deviates from March 31 Prospective Plantings acreages and its trendline yield estimates published at the February Ag Outlook Forum when publishing new crop year production data for corn and soybeans in the May WASDE reports.

Barring any major disruptions from Mother Nature this growing season (which seems highly unlikely at this point as showers are keeping many corn growers from timely plantings this spring), U.S. farmers will grow the country’s second-largest soybean crop and fourth-largest corn crop.

Even with ethanol and export users consuming extra bushels over the past month, the 2024 corn harvest will likely add 100 million more bushels to the U.S. pipeline, with little change to usage expected in the upcoming 2024/25 marketing year.

Over the next couple months, it seems as though markets are more concerned with the state of South America’s corn crops than U.S. yields. However, that could easily shift over the next couple weeks if U.S. farmers continue to be rained out of fields as the optimal planting window begins to narrow.

For soybeans, the extra 285 million bushels anticipated to be harvested this year will be largely consumed by new domestic crush capacity as well as a revival in export volumes. U.S. soybean supplies have ran largely hand-to-mouth since China’s 2020 buying spree, so the remaining extra bushels harvested this fall will help to add more liquidity to the U.S. soybean pipeline.

In the short term, this may present soybean farmers with some bearish price trends, but in the long run the added supply availability will encourage future demand to come online.

U.S. wheat production will trend slightly higher than last year, even though fewer acres were planted this year amid declining prices. But the added supplies will help attract traditional international wheat buyers back to U.S. shores after consecutive years of tight supplies.

In recent weeks, U.S. wheat shipments have inched higher as the dollar has weakened slightly, allowing U.S. wheat to compete slightly more effectively against international competitors. USDA made a slight addition to 2023/24 wheat export volumes, but at 715 million bushels, the total remains the smallest annual volume of U.S. wheat shipments to international customers since 1971/72.

Markets were highly attuned to USDA’s anticipated cuts of 2023/24 South American production headed into last Friday’s WASDE reports from USDA, and USDA provided plenty of action for markets to chew on in that department.

Argentina’s corn crop is facing leafhopper damage ahead of peak harvest activity and somewhere around 5% of Brazil’s soybean crop in the southern state of Rio Grande do Sul has spent most of the last week awaiting harvest under a foot of water. Additionally, safrinha corn crops in Mato Grosso are facing increasing heat stress that is likely to limit yield potential.

USDA took crop damage into consideration and trimmed Argentina’s corn crop by 2 MMT (79 million bushels) to 53 MMT (2.087 billion bushels). Brazil’s corn crop was reduced 2% to 122 MMT (4.803 billion bushels) and its soybean crop was cut 1% to 154 MMT (5.658 billion bushels).

Since last November, USDA has trimmed Brazil’s 2023/24 soybean crop by 9 MMT (331 million bushels, 5.5%) as uncooperative weather limited yield potential. But it is important to remember that this is still a massive soybean crop weighing on the world market despite the losses – even with USDA’s recent cuts to Brazil’s soybean exports, its forecast of 102 MMT for 2023/24 (3.747 billion bushels) is still 4.6% higher than last fall’s estimate meaning that there are still plenty of soybeans to go around.

Brazil’s soybean and Argentina’s corn cuts were not as big as the markets had been hoping leading up to the report’s release. But digging closer into the balance sheet unearths the big driver of price movement for corn on Friday. 

USDA cut 5.2 MMT (205 million bushels) of corn from 2023/24 ending supplies to reflect Argentina and Brazil exporting a combined 236 million fewer bushels (3 MMT) of corn in the remaining months of the 2023/24 marketing year.

The smaller South American corn exports will help keep U.S. corn shipments lucrative in the last month of peak shipping season and will keep the U.S. on track to be the world’s largest corn exporter through the remainder of the 2023/24 marketing year.

At the global level, several items popped out to me. First, old crop corn and soybean ending stocks took a massive hit on UDSA’s downgrades to South America’s current harvest paces. Wheat stocks were little changed.

But the bigger talking points here were the global ending stocks for 2024/25 – new crop production!

First, South American production is expected to reap big corn and soybean harvests next year that are likely to be rapidly devoured by international buyers. But even though those harvests will be bigger, tighter margins and lower crop revenues mean that Brazilian farmers will not likely be adding new acreage as rapidly as we have seen in previous years.

Second, Ukrainian crop production is taking massive hits on its 2024 corn and wheat production estimates as wartime strife is finally expected to catch up with farmers. Ukraine has shown incredible resiliency in its ability to continue shipping grain exports despite ongoing missile attacks from Russia.

But falling cereal grain prices and expensive inputs are also tightening profit margins for Ukrainian farmers, leading them to shrink planted acreage for the 2024 growing season. Ukrainian farmers are also opting for more lucrative oilseed acres this year, though those acreages are also forecast lower than in prewar years.

Third, USDA cut 208 million bushels (nearly 6 MMT) of new crop wheat production from the European Union and Russia amid ongoing weather issues in both regions. Those cuts were a key driver of smaller 2024/25 international wheat ending stocks.

And last, but certainly not least – China.

China’s total 2024/25 feed and residual consumption will increase at a slower rate than in the prior marketing year. USDA’s corn supply and usage estimates were slightly more conservative than a USDA-GAIN attaché report published in early April 2024 had suggested, likely reflecting the looming economic uncertainty hanging over China at present.

China’s 2024/25 corn harvest is expected to total 292 million metric tonnes (MMT) (11.5 billion bushels). USDA’s attaché in China expects that planted acreage and yields will drive the annual production increase this year. China’s early 2024 revisions to its “No. 1 Document”  continues to promote more soybean acres to be planted in China this spring, but the profit potential from corn is too high for Chinese farmers to ignore this year even with government support.

So it should come as no surprise that China’s 2024/25 corn imports are not expected to change from current levels of 23 MMT (906 million bushels). Chinese farmers are increasingly utilizing genetically modified (GM) corn and soybean seeds to improve domestic yields.

The growing domestic corn production pushed Chinese corn prices to three-year lows earlier this year and subsequently led livestock producers to incorporate more corn in feed rations. Shrinking rice supplies mean that Chinese livestock producers will be using more corn in 2024/25 even though the smaller livestock production targets will leave total Chinese livestock feed rations smaller than last year.

China’s wheat production is also expected to increase in 2024/25 thanks to improving yields. In Friday’s WASDE report, USDA made a balance sheet revision to reflect higher 2023/24 wheat imports, likely reflecting buyers taking advantage of multi-year price lows earlier this year and hedging against looming Northern Hemisphere supply issues expected to hit the 2024/25 crop and raise prices.

As a result, China’s 2024/25 international wheat purchases are going to be cut in half, shrinking 52% lower from 11.5 MMT (423 million bushels) in 2023/24 to 5.5 MMT (202 million bushels) in 2024/25.

Even with the drought and other weather issues plaguing the Northern Hemisphere this spring, China’s wheat yield improvements are likely to offset more constrained global supplies in 2024/25. And with Chinese livestock producers opting to use cheaper corn instead of wheat in feed rations, China may not move the needle significantly in the international wheat market this year, barring any weather issues at home or a significant decline in global wheat prices.

Even with a shrinking sow herd in 2024/25, China’s soybean imports are going to rise 4 MMT (147 million bushels, 3.8%) from last year, just past the 4-billion-bushel (109 MMT) benchmark. The uptick in domestic corn acres is going to force Chinese soybean processors to utilize international sources for adequate supplies in the upcoming marketing year.

Crush margins will keep soymeal feed supplies in China priced competitively with corn in 2024/25. Plus, even though the sow herd is shrinking, an increase in aquaculture production and stable poultry growth will keep China’s hunger for soybeans growing instead of contracting in 2024/25, regardless of bearish economic headwinds.

For corn and soybeans, China’s import volumes were forecast higher in Friday’s May 2024 WASDE report than earlier GAIN reports had suggested. This helped keep a floor under corn and soybean prices in the aftermath of USDA’s report release, but it is not clear if U.S. farmers will be able to reap those benefits by the time fall harvest starts.

China remains the world’s largest corn and soybean buyer looking ahead to the 2024/25 marketing year. Who will earn the crown of their primary supplier?

FFTF updates

Over the past couple weeks, farmers around the country have been frustrated by persistent showers, cool temperatures, and few opportunities for meaningful planting progress. Farmers are frustrated, but they aren’t factoring yield losses – yet.

“[It’s been] nothing, nothing, [then planting] 18 hours a day for five days in a row and then nothing, nothing [again],” a Northern Illinois corn grower explained.

“We've been waiting for ground to dry out, but planting has gone smooth so far,” a Northern Indiana producer’s comments perfectly summed up current farmer sentiment. “We were glad to get the rain as our subsoils were dry, but we were glad they quit for a while.”

For more comments and updated weather outlooks, check out our latest FFTF article on the Farm Futures website.

Will you have enough clear days this weekend to make meaningful planting progress? Are your alfalfa fields fighting off weevil pressures? Share your insights with us in our ongoing Feedback from the Field survey!

Feedback from the Field is an open-sourced, ongoing farmer survey of current crop and weather conditions across the Heartland. If you would like to participate at any time throughout the growing season, click this link to take the survey and share updates about your farm’s spring progress. I review and upload results daily to the FFTF Google MyMap, so farmers can see others’ responses from across the country – or even across the county!

Corn

We are approaching the middle of May, which is a critical point in optimizing the yield window for corn planting. Corn markets aren’t worried yet – prices drifted $0.01-$0.02/bushel lower this morning – but expect heightened price volatility when USDA releases its Crop Progress update later this afternoon.

Markets are still digesting USDA’s expectations for bigger U.S. corn and soybean supplies. Gains in the wheat market helped keep corn’s losses in check this morning.

Soybeans

Soybean prices fell $0.02-$0.04/bushel this morning amid USDA’s expectations of larger new crop supplies expected to be harvested by U.S. farmers later this year. Even with USDA’s cuts to Brazil’s soybean crop following devastating floods in the southern state of Rio Grande do Sul over the past couple weeks, the South American soybean behemoth continues to ship massive quantities of soybeans into international channels.

Wheat

Another frost hit key wheat producing regions in Southern Russia over the weekend, reviving concerns about supplies from the world’s largest wheat exporter this morning. U.S. futures rose $0.03-$0.06/bushel this morning on the supply jitters.

“Wheat remains higher in early trade, the market still focused on defining the loss from the frost seen in Russia,” Matt Ammermann, StoneX commodity risk manager, told Reuters this morning. “But Mother Nature is also being watched with further welcome rain forecast in coming days in south Russia and elsewhere in the Black Sea."

“Eyes remain on Russian rains for rest of May. If no rains show up, traders may continue to buy. Perhaps the frost worst case is behind us, now the market wants some clarity about the extent of possible Russian crop damage.”

Weather

Clear weekend planting weather will likely give way to showers and thunderstorms across the Corn Belt and Southern Plains today. Precipitation totals could reach up to an inch in these regions over the next 24 hours, which will likely delay – again – planting progress.

Today’s showers will linger over the Eastern Corn Belt through Wednesday. And even though the Upper Midwest will be spared some of today and tomorrow’s showers, another thunderstorm system is expected to move into the Western Plains by tomorrow evening and linger over the region through Wednesday.

That means we will likely continue to see spotty planting progress this week.

What else I’m reading at www.FarmFutures.com this morning: