Traditionally April is a quieter time for agricultural commodity trade as farmers are heading to the fields to begin planting. Normally by now trade has a decent handle on the United States grain supply, and with little fresh news to trade on during the month of April, prices historically, have a tendency to trade sideways to lower.
That may not be the case this year as old crop corn and soybean ending stocks remain historically tight. Even with larger planted acres expected this spring, trade will continue to eye weather this spring and summer for potential production concerns. There could be many twists and turns for grain prices this month. Here are the top three items for the April watch list.
Soybeans
The soybean old crop fundamentals continue to remain friendly. The stocks to use ratio is now tied for the tightest ever in history at 2.6%. Export demand is strong with export sales near 98% of U.S. Department of Agriculture projections of 2.25 billion bushels. Export inspections (what has actually left the country already) is pegged near 90% of USDA projections, well ahead of the normal 5-year average pace. While the number of soybean acres planted in the U.S. this spring will be up substantially from one year ago, perfect weather this spring and summer is essential. A bumper crop is needed to help offset the tight ending stocks.
Demand will also be watched closely. Export sales are ready to take out the USDA export projections, so many feel that the USDA will need to increase the export demand category on the April 9 WASDE report. If this occurs, then ending stocks will continue to shrink.
U.S. dollar
After finding a price low of 89.16 in early January, the value of the U.S. Dollar index has been slowly creeping higher. By late March the value of the index had reach near the 93.00 mark, a value not seen since November 2020. In late March, U.S. Treasury Secretary Janet Yellen was quite confident in her speech to Congress that the economic outlook was optimistic, which triggered buying of the dollar.
Remember, when the value of the dollar is lower compared to other global currencies, it makes it cheaper for other countries to import our commodities based on currency exchange rates. A lower dollar means more U.S. agricultural exports are likely. Now that the dollar has been creeping higher, some of that extra attractiveness to purchase U.S. commodities may be waning.
Weekly crop progress reports
Every Monday at 3 p.m. Central Time, the USDA releases the planting progress report. This shows the pace of planting in the U.S., along with the condition of the crops, and pasture conditions. Should there be any delay in spring planting, or any worry that the condition of the crop is deteriorating, that will support price. On the flipside, if the planting pace is swift and weather conducive to growing a large crop, that will weigh on grain prices during the month of April.
Be ready. When prices are higher and the outlook for grain prices is friendly, it makes it easier to be complacent with your grain marketing. Make sure you are monitoring the value in front of you.
Editor’s note: Naomi Blohm is a marketing advisor with Total Farm Marketing by Stewart-Marketing and she is a regular contributor to the Iowa PBS series “Market to Market.” She can be reached at [email protected].
