Strong early market, but demand and yields prompt concerns
Nationally, planting is just getting started, with only about 4-5% of the expected acres planted so far. Welch said one concern within the corn market is that U.S. planting prospects anticipate 4-5 million more acres of corn compared to last year.
“Compared to where corn prices ended up last October at harvest, the futures prices now are well above those levels,” Welch said. “So, the question is can we hold that level of price optimism if we have a significant increase in planted and harvested acres and if the yields hold up about where they were a year ago.”
The projected U.S. corn acres and the potential for a large Brazilian corn crop could significantly impact the eventual price, Welch said. Those factors could be offset by increased domestic demand and other market pressures, such as tariffs and trade concerns, as the 2024 crop marketing year comes to a close.
“I think much of the concern is on what that yield potential will be, particularly for the U.S. crop,” he said. “If we increase acres by 4 million to 5 million, as farmers indicated in the prospective plantings report and hit a trend line — an average of 180 bushels per acre — that would be another all-time record high for yield.”
It’s hard for Welch to imagine that corn prices could remain this high if record production materializes while demand, especially from export markets, remains in question.
Plan ahead; lock in prices
Welch said these conditions incentivize producers to market their crops to outlets now, whether through a direct contract or a sale with the grain elevator, feedlot, ethanol plant or other buyer.
“Have that conversation: ‘Is there something we can do to lock in these prices now?’” he said. “We have tools using futures and options markets. At the very least, establish a floor under these markets by employing various trading strategies, such as minimum price contracts. There’s a cost to do that, but recognize that if we really see this amount of acreage, prices aren’t likely to hold up.”
Ultimately, Welch said a range of factors will impact corn prices. Timely planting schedules, weather conditions throughout the growing season and across the U.S. Corn Belt, overall yields, and the impact of tariffs on grain sorghum prices will all contribute to the supply-demand pressures that influence the market.
AgriLife Extension district reporters compiled the following summaries:
Central
Some beneficial rainfall was received from showers and thunderstorms; rain was in the forecast. High winds and temperatures evaporated much of the moisture that had been received. Fertilizer was widely applied ahead of the rain event. Stream flows were low, and stock tanks were drying up. Corn and sorghum planting was complete, and wheat and oats had headed out. Cotton was planted and beginning to emerge. Some freeze damage was evident on corn and wheat. Cool-season hay was being harvested as weather permitted. There was growing concern about the reemergence of leafhoppers. Livestock markets remained strong and steady, with solid performances across cattle, sheep and goats. Cattle feeding has slowed due to improved grazing conditions.
The district received rain. Soil moisture improved significantly, and livestock drinking sources were filling up. More rain chances were in the forecast, and optimism for cotton planting was up. Pastures began to green up, and ranchers were able to reduce their reliance on supplemental feeding. Calving season was almost complete, and spring calves looked good. Most wheat had headed out, and another rain should greatly help grain fill. Some producers were pulling feeder calves off wheat pastures, while others continued to bring in stockers. Some farmers were cutting and baling wheat for hay.
Coastal Bend
No rain was reported, and soil moisture conditions continued to decline. Field conditions continued to dry, and all crops could benefit from moisture. Most crops emerged and looked fair to good, but some corn fields were showing signs of drought stress. The recently emerged rice required a flush of irrigation water, and very little of the rice crop was at flood stage. Cotton planting is expected to finish soon, and cultivation and fertilizer side-dressings for corn have been noted. Thrips were at control thresholds in cotton. Hay producers made their first cutting. Rangeland and pasture conditions were suffering in some areas and declining rapidly, while other areas reported improvement and increased forage. Cattle remained in mostly fair condition, but supplemental feeding may resume if conditions decline further. Livestock in some areas continued to find good forage and improved body conditions.
East
Soil moisture conditions were declining. More rain was needed to continue productive crop and forage growth. High winds delayed spraying of any kind. Winds also quickly dried up soil moisture. Ryegrass and clover stands were in good shape, and warm-season perennial grasses started to green up. Pasture and rangeland conditions were good. Subsoil and topsoil conditions were adequate. Livestock were in fair to good condition with little supplementation taking place.
Southeast
Rice planting continued, and some producers flushed fields due to dry conditions, while others waited for rainfall to aid germination. Windy conditions accelerated soil moisture losses. Producers cut ryegrass in preparation for the hay season. Warm-season grasses and summer forages were making progress. Despite over 5 inches of heavy rainfall in some areas, conditions remained dry, which delayed initial hay cuttings. Winter forages were seeding out and tapering off. Pasture and rangeland ratings were poor to excellent. Soil moisture levels were short to surplus. Livestock conditions were poor to excellent. Oat fields were headed and in good shape. Wheat was in excellent condition. Corn planting was nearly complete, with some fields emerging. Sorghum planting reached a midpoint.
South Plains
Unseasonably warm temperatures and high winds continued to deplete subsoil and topsoil moisture and dry out grasses and cropland. Winter wheat was in desperate need of rain. Dryland producers needed rainfall soon. Some farmers were just now preparing for spring planting. Cattle were in good condition but on supplemental feed. Rangeland was expected to struggle without rain soon.
Panhandle
Some areas received light rain, which was beneficial to wheat and rangelands. Wheat fields started the boot stage. Growers began to plant corn in a few fields. Soil temperatures were being monitored in anticipation of planting cotton. Overall soil moisture was very short to adequate. Pasture and range conditions were reported from poor to good. Overall, crops were in poor to good condition.
Far West
The district continued to experience severe drought conditions. But recent rainfall amounts ranged from 0.5-3.5 inches. Rainfall provided temporary relief but was accompanied by damaging hail and strong winds. Despite the rains, the district remained in dire need of sustained precipitation to improve soil moisture and alleviate drought stress. Corn plants emerged but were growing slowly due to below-normal temperatures. Watermelon planting and ground preparations for other crops were ongoing. Some sorghum was planted. Wheat harvest for seed and hay was expected soon. Pasture weeds were beginning to green up; however, grass remained sparse, and overall pasture conditions were poor. Livestock were in fair to poor condition, with supplemental feeding necessary due to limited forage. The overall outlook remained challenging, with continued dry conditions and above-average temperatures expected.
West Central
All areas needed rainfall. Most areas received some rain, with 0.5-6 inches reported, but hot, dry conditions persisted in many areas. Subsoil moisture remained very short. Temperatures returned to the mid-80s, and rain was in the forecast. Pastures continued to improve but needed more rainfall to produce forage. Some hail and wind damage from thunderstorms was reported. Warm-season forages were growing slowly, and cool-season weeds were competing with grasses. Some fields were being planted to spring forages. Wheat was in poor to good condition. Wheat in fields going to grain was fully headed out. Grain yield estimates were below average, and many producers were grazing out fields while others were baling wheat. Some producers were moving cattle off wheat fields earlier than usual. Some farmers planted Sudan grass and haygrazer before the rainfall. Corn under irrigation had emerged. Some dryland sorghum that emerged needed rainfall soon. Cotton fields were being prepared for planting. Row crop producers were spraying for weeds. Pecan orchards were progressing slowly. Additional rains should improve all agricultural conditions. Livestock body conditions slowly improved as cattle continued to seek green grass. More runoff rainfall was needed to fill stock tanks. Supplemental feeding increased in some areas, while grazing was improving body condition scores in some herds. Producers were selling calves, kids and lambs amid strong markets.
Southwest
Hot, windy and dry conditions persisted. The district received widespread rainfall, with precipitation amounts ranging from 1-3 inches. This rainfall should provide some short-term relief for a few producers to skip one irrigation cycle for row crops. Despite the rain, corn and sorghum continued to decline due to ongoing drought conditions. Pastures looked greener, the grass was beginning to grow, and livestock were grazing more. Producers were slowing down the number of livestock being taken to the sale barn as spring conditions improved to levels not experienced in multiple years. Livestock producers were considering early weaning to conserve breeding females in case range conditions do not improve. Supplemental feeding of livestock and wildlife remained heavy. Feral hog activity decreased due to the dry conditions.
Source : tamu.edu