U.S. weather and USDA reports again impact markets

Grains traded lower this week, while cattle continue to delight.

While grains had mixed results this week, cattle continue to bring gains in the markets.
April Baumgarten/Forum News Service

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The first week of April turned out to be a tough week for the grains. The short week saw the grains start the week mixed with wheat under pressure (wheat traded lower in every session) while corn and soybeans pushed higher. But then the grains traded in lock step with each other for the rest of the week, which was lower.

Wheat tried to push higher after Monday afternoon’s Crop Progress report. The first Crop Progress report for the 2023 crop year had this year’s wheat crop statistically tied with last year for the lowest rating in 27 years for early April. Hard red winter wheat (southern Plains) and soft red winter (Delta and Corn Belt) wheat are marginally better than last year at this time, but the white winter wheat (Pacific Northwest) is at its lowest rating in history. As of April 2, winter wheat heading was estimated at 6% complete versus 0% last week and 2% average. Winter wheat’s rating was estimated at 28% good/excellent, 36% fair, and 36% poor/very poor, 2% below last year at this time.
The state breakdowns are as follows:

  • Colorado: 27% g/e, down1%,
  • Illinios: 56% g/e, down 2%,
  • Kansas: 16% g/e, down 3%,
  • Montana: 24% good, down 7%,
  • Oklahoma: 26% g/e, down 8%,
  • Texas: 18% g/e unchanged.

The grains were able to push higher early in the week with most of the early support coming from the surprising news that OPEC was going to reduce production by 1.16 million barrels per day. To top that off Louis Dreyfus Company announced their decision to also stop exporting Russia grain starting July 1. This makes three major exporting companies that will no longer source grain out of Russia.
Wheat was not able to hold its gains as once Minneapolis crossed over $9, hedge selling pressure pushed the market lower. Corn followed wheat and trimmed its gains, but there was also a bit of hedge selling pressure there as well.

Technical selling hit the grains later in the week as all of the grains were overbought and in need of a correction. Part of the pressure was due to hedge selling as most markets had staged a good rally and finally got back to sellable levels. But a majority of the selling was tied to improving weather conditions.


Soybeans saw pressure coming from StoneX’s updated Brazil production estimates. StoneX increased their Brazil soybean production estimate to 157.68 million metric tons versus 154.55 million metric tons last month. To be consistent, StoneX also increased Brazil’s corn production estimate, putting their guess at 131.34 million metric tons versus 130.91 million metric tons last month.

The trifecta of pressure came from economic woes as the recent rally in crude oil caused the Federal Reserve to make an announcement that they will likely have to continue to increase rates as inflation is still an issue. This put all commodities on the defense except gold and silver, which traders flock to in times of uncertainty.

Late Thursday, South American crop progress reports were released. As of April 6, Argentina corn harvest was estimated at 13% complete versus 21% average. Soybean harvest has started but has shown little progress. Yields are being reported as lower than expected. As of April 7, Brazil’s soybean harvest was estimated at 81% complete versus 83% average. First corn crop harvest was estimated at 66% complete versus 68% average. Second corn crop planting is complete.

The second week of April was dominated early by the release of USDA reports. On Monday, USDA released their weekly Crop Progress report and on Tuesday, USDA released their April Crop Production estimate. The Crop Progress report was expected to show another week of lower crop ratings for winter wheat while the Crop Production report was expected to show increasing wheat stocks and decreasing corn and soybean stocks. It appears that USDA kicked the can down the road with dealing with the tight stocks from the March 31 Quarterly Grain Stocks estimate.

For wheat, USDA’s U.S. numbers were neutral to negative, which was expected. USDA did adjust wheat’s ending stocks estimate higher, as expected, but their method of increasing the stocks was not expected. The trade was expecting USDA to trim wheat exports since exports have been so lackluster. But instead, USDA trimmed wheat feed demand. The result was a 30 million bushel increase in wheat stocks, which was 24 million bushels above expectations.

USDA approached solving corn’s lower Quarterly Grain Stocks estimate in a way that no one expected when they lowered imports. But USDA offset that adjustment by lowering food demand by the same amount, leaving U.S. corn stocks unchanged. So, in the end, USDA kicked the can of tighter corn stocks down the road to the June Stocks estimate and July Crop Production report. The report was neutral corn as although stocks were unchanged, they were 23 million bushels above expectations.

Corn was also under pressure from the change in the weather forecast. Not only did the weather forecast call for a dry two weeks for the northern Plains, but it also called for a dry spell for the Corn Belt, which will allow planters to get rolling. As of Sunday, seven states were planting corn. If this forecast holds, it will be a lot more by next Sunday.

USDA really kicked the can down the road for soybeans as they left every supply and demand number unchanged. The trade was expecting a reduction in the residual estimate, but instead USDA will wait to see if the small stocks estimate is confirmed in the June report. But that did not seem to impact the soybean trade as improving weather forecasts helped to give soybeans support. The expectation that producers will plant their intended wheat and corn acreage and less soybean acres helped to support soybeans.


On the world stage, wheat’s ending stocks were friendly as they were trimmed more than expected, corn stocks were as expected, and soybeans stocks higher than expected. The South American numbers were mixed as USDA increased Brazil’s soybean production by 1 million metric tons to 154 million metric tons but left corn unchanged at 125 million metric tons. Argentina’s corn production was trimmed 3 million metric tons to 37 million metric tons as expected but soybean production was trimmed 6 million metric tons to 27 million metric tons, which was 2 million metric tons below expectations.

Weather will be the main driver in the grains going forward. And at this point, none of the grains have much of a weather premium built in.

Cattle continue to amaze and delight the trade, setting new all-time contract highs on an almost daily basis. Live cattle traded to a new all-time high consistently during the second week of April while the feeder cattle contracts continue to chase their 2014 highs. All feeder cattle contracts did put in new contract highs but have a way to go to test the 2014 levels. Strong cash and tight supplies continue to be the main supporting factors. Technically cattle are overbought and in need of a correction, but at this point packers need for product is pushing futures as well as cash.

“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”

Opinion by Randy Martinson
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