Storms across the Midwest brought rain for newly planted crops, but the market hasn’t reacted quite yet to the positive crop conditions overall.
Jerry Gidel, market analyst with Midland research, said many farmers toward the eastern Corn Belt have been planting into great conditions, and the market doesn’t seem to be feeling the pressure at the moment.
“The market seems to think everything is hunky dory because of the rain,” Gidel said.
Despite the market not seeing major swings lower, Gidel said not to expect major jumps in basis price, especially in corn. While he said the USDA estimate for 181 bushels per acre may be optimistic, a turnaround in drought conditions toward the west could bring in a high-yielding crop. If that doesn’t change, however, that’s when prices may find support.
“I always like being half sold going into the fall,” he said. “But there hasn’t been some of those opportunities quite yet, and the market has jumped on the idea that crop prospects are big.”
Traders aren’t pressuring crop prices due to overall uncertainty about the global export picture. China canceled some of its previous U.S. purchases of corn due to cheaper Brazilian prices. On soybeans, the Argentinian soybean crop continues to be downgraded which could open up more buying in the U.S. market.
“The dartboard is wide open for (corn and soybeans),” Gidel said. “The soybean crop never really got to a point where they could save themselves because it was so dry. The crop’s ability to withstand the heat down there wasn’t what you would normally expect.”
Meanwhile, wheat purchases will be greatly impacted by the ongoing talks between Russia and Ukraine to continue the Black Sea grain deal that has allowed Ukraine to be a significant grain exporter.
“We have no idea on wheat demand right now,” he said. “That could turn things into quite the quandary. The EU in general wants to be supportive of the Ukrainians, but that could be a huge factor in the demand picture. If we take out their wheat and corn exports, you have to believe that will tighten up the world’s demand situation.”