The battle for acres is looking more of a two-crop affair.
New crop corn futures have managed to put up a fight against the pullback in grain futures this week, even as old-crop ones have faltered. Indeed, the December lot on Friday set a contract high of $4.82 ¼ a bushel.
That has helped corn – on a new crop basis - keep up with soybeans, which have escaped this week’s selling.
So corn has maintained its price appeal relative to soybeans, the grain’s top competitor in spring sowings programmes – even if that ratio is, at close to 2.6, weighted towards the oilseed.
Wheat loses ground
However, spring wheat has fallen behind on a new crop basis, dipping to its lowest ratio compared with corn of 2021.
That tallies with easing concerns over US all-wheat supplies, with its export pace remaining behind that needed to meet the US Department of Agriculture’s forecast of 965m bushels for 2020-21, so suggesting more domestic supplies to play with than has been pencilled in.
Worries over freeze harm to US winter wheat have moderated too - although could re-emerge if damage emerges as crops become more developed.
Cotton, meanwhile, has begun to lag even more, with its ratio compared with soybeans on a new crop basis down to 4.06 on Friday, from a high of 4.30 on February 18.
It looks like the USDA’s February 18-19 Outlook Forum - which revealed a forecast of 12.0m acres for US cotton sowings this year, above the 11.5m acres estimated earlier by a National Cotton Council survey - did have an impact after all.
The fall in old crop prices, linked to economic jitters which have undermined share prices too, has also likely had a toll. (Cotton, as an industrial ag, tends to be vulnerable in price terms to equity market moves than food commodities.)
‘Big question mark’
Still, the battle for acres is still of course only in its opening stages, with the actual sowings themselves yet to begin in earnest – and for which progress may have as big input on prices ahead too.
Indeed, spreading dryness in Texas represents a concern for the cotton market in particular, given that the state is responsible for half US production of the fibre.
As Plexus Cotton noted, “the ongoing drought in Texas… puts a big question mark behind any acreage estimate” for US cotton this year.
“Many cotton-producing counties in south and west Texas are currently in a moderate-to-severe drought,” after missing out on winter rains – a common featyre in fact of La Nina periods.
“This means that subsoil moisture levels are inadequate, and the region now hopes for rainfall during the planting window to get the crop going and for enough moisture during the summer months to keep it from wilting away.”
|New crop futures price ratios|
|Soybeans vs corn
||Cotton vs soybeans
||Spring wheat vs corn|
|March 5 (mid-session)||2.58||4.06||1.38|
|February 19 (second day of USDA Outlook Forum)||2.60||4.29||1.44|
|February 18 (first day of USDA Outlook Forum)||2.58||4.30||1.45|
|January 12 (day of USDA Wasde, grain stocks, winter wheat sowings reports)||2.57||3.94||1.40|
|December 31 2020||2.56||4.04||1.43|
|November 30 2020||2.55||4.07||1.44|