Weekly Crop Commentary - 1/13/2023

Jan 13, 2023

Wes Bahan
Vice President, Grain Division

Good afternoon. Well, we got our update from the USDA and true to fashion, it moved the markets. It seemed to reveal the haves and have nots in terms of production and stocks. Areas to the west of the Mississippi were hit with drought. This not only decreased their yield in grain crops, but also reduced yields for forage crop. More acres were harvested for silage for animal feed.  Hay crops made less tonnage so more grain has to be used for feeding purposes and thus reducing their available stocks. Areas east of the Mississippi seemed to be able to offset that production lessening the overall effect, but displacing supplies of grains. Here in Ohio we were blessed with good crops, although we have a bit of vomitoxin in some of the corn. We saw a big increase in soybean stocks from last year. Much of this could be related to the increase in acres from the prior year. We also saw a pretty big reduction in soybean usage, which was somewhat shocking. It seemed that demand for our beans has been rather strong in the export and domestic markets. What does this mean down the road? For the short term, basis will likely see some pressure, especially if the board wants to rally. At some point the market is going to have to figure out a way to get beans from the east to the west. The same will have to work for corn also, the market has a lot of defining to do in the future. As market conditions change, most of the time our goals get adjusted also. We need to keep that in mind. Profits are only realized if the sale is made. What are your goals for the success of your operation? Just something to think about over the weekend. As always, thank you for your business.

Haylee Van Scoy
Director of Grain Purchasing

Another January report is in the books. Markets found some bullish news to hang their hats on to finish out the week in the green, but overall, there wasn’t too much out there that was substantially shocking. Lisa did a great job with her WASDE and Quarterly Stocks Summary that came out earlier this afternoon, so I won’t go into too much detail on the report. Markets are continuing to monitor the drought situation in Argentina and harvest progress in Brazil, which will likely make up for it. Nationally, it appears river levels are slowly continuing to improve and HRW areas out west are seeing some reprieve, but are still lacking moisture for this wheat crop. Topics of interest to keep an eye on until the March planting intentions report will be China’s economy, the US dollar, and weather. Reminder that grain markets will be closed on Monday for MLK Day and trading hours will resume Monday evening at 8 pm EST. Hope you all have a wonderful weekend!

Lou Baughman
Grain Merchandiser, Kenton (Region 1)

There were big surprises in the USDA reports that released yesterday. This rallied corn fifteen cents and beans twenty-five cents on Thursday’s close. Harvested acreage was lowered in both corn and beans. Planted winter wheat acres increased this year. Now that we have an updated supply number, we move to watching the demand side, along with the South American crop progress. The Corn Belt is forecasted over the next 6-10 days to have unseasonably warm temperatures and above normal precipitation. The market will be closed Monday to observe Martin Luther King, Jr. Day. Enjoy your weekend.

Will Gase
Grain Merchandiser, Upper Sandusky (Region 2)

Hello everyone, my name is Will Gase and I am the new regional grain merchandiser in Upper Sandusky. In December I graduated from The Ohio State University with a degree in Agribusiness and Applied Economics. I was born and raised in Wood County, outside of Bowling Green, where I raised animals for the county fair and was involved in 4-H and FFA. I am looking forward to meeting and working with the customers of Upper Sandusky, Arlington, Vanlue, and McCutchenville.

Steve Bricher
Grain Operation Manager, Urbana (Region 3)

It is 2023 and all is quiet, so far. We received the January crop report yesterday. I am sure some of my colleagues will comment on it, so I don’t need to.

The corn market has been sideways-to-lower since October. The question I am getting consistently is will we see 7.00 corn here locally. I think we are going to struggle to get there as we have a reasonable carryout, and export sales have been poor at best. We see good demand from the livestock and industrial market, but we need exports to improve to give this corn market a boost.

I track new crop corn values back to 2006 and on January 3, 2023, you could have sold new crop corn for fall to Urbana at 5.62. That is the highest price ever for new corn on January 3rd. Am I saying that you need to sell new crop corn as we are starting out the year 60 cents higher than we were last January? History tells me we will rally this market at some point in time but in only 5 years since 2006 (2008, 2011, 2012, 2021 and 2022) did we break the 6.00 price level for fall corn. I know it seems we have moved to a new price level but 6.00 corn is not a bad number to get some new corn priced.

Soybeans have fared better as we are up around a 1.50 since early October. Soybean demand is good domestically as we as in the export market. We have cracked the 15.00 price point a couple of times in the last few weeks. The crop is coming in out of South America. Brazil is very good, but Argentina is not. The consensus today is Brazil will more than make up for the soybean shortfall in Argentina.

Looking at new crop beans on January 3rd, you could have contracted for fall 2023 at 13.47. That is the highest number ever for new crop beans in early January by over a $1.00 a bushel. Looking back at the numbers to 2005, we have had only 3 years (2008, 2012 and 2022) where we could have sold new crop beans for over 14.00 for the entire year up to harvest.

We have to remember where we are today and under normal yield conditions what we will generate for revenue per acre. I always recommend putting in target offers to give yourself the best opportunity to get bushels sold at the price points that you want.

Lisa Warne
Grain Merchandiser, Marysville (Region 4)

Happy Friday the 13th! The USDA reports this week gave a nice bump to the cash corn and bean market, up 3% and 2%, respectively. Wheat is mostly unchanged from last Friday. The biggest shocker of the reports yesterday was the reduction of 1.6 million acres of harvested corn. That was the largest adjustment to acres between the November and January reports since USDA started publishing this data in 1974. The markets have cooled some but are still positive from the bullish report.
Looking at South America, Brazil’s Conab adjusted their soybean production estimates to 152.7 MMT yesterday morning and USDA had a near match at 153 MMT. Argentina’s Rosario Grain Exchange also released updated numbers Thursday morning, reducing their soybean crop from 49 MMT to 37 MMT. The USDA’s revised estimate was only lowered to 45.5 MMT, so we may see future cutbacks to that figure.
We’ve seen a steady flow of inbound grain at MAC with quick turnaround times and minimal waiting. If you haven’t cored your bins and checked your grain, it’s a good time to get some moved with corn over 6.60 and beans around 15.00. The markets are closed Monday for MLK Jr. Day and will reopen Monday evening at 8:00pm. Have a great weekend!

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