Mark's Market Talk

May 15, 2023

The USDA released the May WADSE report last Friday and unless you are a wheat farmer, the news was poor. This report is geared to give us the first look at a balance sheet for the coming crop year. They stayed with 92 million acres of corn planted and used a record yield of 181.5. If this is realized, it would produce one of our biggest carryout ever. You can argue they are high on acres and yield both, and you might be right. However, this is how they see things today using non-threatening weather for the season. For beans they stayed with planting 87.5 million acres and raised the yield a touch to 52. This would be a record bean crop for the US and would push the 23/24 ending stocks to 335 million bushels. That by itself isn’t that terrible, but the world carryout is expected to be record high which will be detrimental to prices. Once again, the USDA is not accounting for any poor weather conditions even though many forecasters are predicting the return of an El Nino event later this summer which could trim these yields in a hurry. This report leaves all of us wondering how to address new crop sales. I know for a fact that most farmers are way behind on making these sales. It has been tough to make sales when you are looking at a 1.50 inverse on corn prices and 2.00 on the beans. We have had excellent prices for a couple of years, and we got complacent and overlooked some sell signals in the past 6 months. So, do you rush in and catch up on these sales? Or do you sit back and see what the weather will do in the next couple of months. There are still acres to plant, especially in the northern plains. But they are farther along than we thought they would be a month ago. There is still a lot of area showing up on the drought maps. Will these areas catch up on moisture prior to a possible hot and dry period? Will the demand for biofuels grow like we want to believe, or will the possible recession become a reality and people are forced to travel less.  As you can see today there are more questions than answers. You want to think December corn will find support above 5.00, but we are trading very close to the line. Prior to this report most analysts saw a move back to the 5.50/5.60 area. Now it will probably take some poor weather to get there. November beans gave up the 12.50 support level last week and now we may see if 12.00 will hold. Again, the weather will have to be our friend. The bad part of this is we live and farm in an area that sometimes ends up in the middle of a weather event. We would prefer some other area would do that for us.