Weekly Crop Commentary - 1/14/2022
Jan 14, 2022
Ed Nienaber
Vice President, Grain Division
The grain markets this week absorbed a plethora of information from the USDA as the government acknowledged what we all expected. We have ample supplies based on current demand to bridge the gap between old and new 2022 crop. With confirmation of carry-over corn stocks estimated at 1.5 billion bushels and beans 0.350, the trade will now focus on the southern hemisphere crop for price direction. As we touched on last week, much of the rally in bean price was largely due to drought conditions in southern parts of Brazil caused by continued effects of the La Nina weather event. However, we are now seeing signs of this ending and forecast for more seasonal weather and additional rainfall in Brazil. With the bullish market we witnessed in December, the funds have taken profits and now need another reason to buy. Current basis levels have been sideways-to-weaker as favorable winter weather and contracted bushels freely move to the end user when space and transportation will allow it to be delivered. Next major crop report will be the prospective planting report and stock usage for first six months of 2021-22 crop year. These figures will be released at the end of March. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. The USDA released the final production numbers from 2021, and as advertised the corn yield was a record and the soybean yield was a tie for the record. Corn yield at 193 bushels per acre and soybean yield at 56.5. On the national from the corn yield was a record at 177 bushels per acre, and the soybeans edged out last years record at 51.4 bushels per acre. Probably the most highlighted release came as Ohio’s wheat planted acreage increased 21% from last year to a whopping 700,000 acres. Even though the corn and soybean numbers were really nothing not expected they also were not anything bullish to the market either. As the market really rallied nice into the report, they now are taking a breather waiting on the next headline to determine direction. So now all eyes will be on the March 31st prospective planting report. If you did not make sales at the higher level, we are still looking at some attractive prices to make catch up sales. The market will keep close watch on the weather in Southern Brazil and Argentina over the weekend as they are expected to see some precipitation. We look to maybe have our first chance of some measurable snow over the weekend, so enjoy and have a great weekend.
Lou Baughman
Grain Origination, Kenton (Region 1)
The market is watching the South American weather very carefully. Grain markets will be closed Monday. South America’s weekend weather will determine the direction of the market come Tuesday morning. US cash bean prices will start to struggle if SA weather straightens up, and the closer SA harvest gets. For those of you with delayed price beans watch the market closely the next couple weeks you may want to sell them before they take the seasonal dip.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon. Though corn is trying to end the week on a positive note, overall, it’s been a rough week in the grain market. With ninety minutes left to trade, nearby cash corn has lost over a dime, soybeans around 40 cents, and wheat also down over a dime. The only neutral spot in the big three seems to be new corn, which sits at unchanged for the week.
On Wednesday, soybeans had a post-report whiplash. Within the first couple minutes, they were down 20, back to unchanged within the next couple minutes, then eventually up 15, ending the day up 12 ¾. That’s a good example of just how volatile markets can be on report days. Diving into the USDA reports, the domestic numbers were on the bearish side with production, carryout, and Dec 1 stocks all being a little higher than the average trade guesses. It was the bullish global numbers (mostly soybeans) that offset those and kept things neutral-to-positive. Locally, final Ohio yields this past fall ended up being records with corn at 193 BPA and soybeans 56.5 BPA.
Trader discussions are all dominated by South American weather. Thursday and Friday we’ve seen S.A. drought premiums getting extracted from soybeans as the two-week forecast for Argentina are finally calling for soaking rains. This weekend looks promising for them, but will the forecast hold true? The market is on a three-day weekend with Monday being Martin Luther King Jr Day. Monday night’s market opening will probably tell us if Argentina got rain or not. Have a great weekend and we’ll talk to you next week!
Sarah Harner
Grain Merchandiser, Marysville (Region 4
Good afternoon. A busy week hauling in January contracts in the Marysville area with the weather holding through so far to end this week. Overall, we can say the report on Wednesday was not as eventful as most predicted. It was reported that the 2021 bean crop was a record at 4.44 billion bushels, and the 2021 corn crop at its second-best crop at 15.1 billion bushels. Directly after the report market movements for corn were choppy while beans and wheat fell lower. Markets should continue to digest the report from Wednesday then most likely turn the attention back to the SA weather, specifically on the heat in Argentina and if rain truly falls there. Markets will be closed Monday for Martin Luther King Day however Heritage will still be open to get those January contracts delivered. Enjoy your weekend and be careful if the weather turns snowy this weekend.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
Happy Friday! Markets have been facing a neutral to bearish tone after Wednesday’s not-so-exciting reports (January WASDE, USDA Quarterly Stocks, and NASS Winter Wheat Seedings). USDA slightly increased corn planted and harvested acres for the 21/22 crop, but they left yield unchanged at 177.0 BPA, resulting in a slightly higher final production. As for demand, they increased ethanol and industrial estimates slightly but lowered exports due to concerns with US corn shipments meeting expectations. US bean harvested acres were lowered from 86.4 to 86.3, but we did see an increased yield of 51.4 BPA, resulting in a higher final production estimate as well with no changes made to crush, exports, or seed demand. The only slight increase was in residual.
In regards to ending stocks for both corn and beans, it appeared to be awash with higher US ending stocks and lower world ending stocks due to production cuts in South American corn and beans. Argentina has been particularly dry over the last month with crop ratings dropping 57% in beans (31% gd/ex this week) and 64% in corn (23% gd/ex this week) over the last few weeks.
Quarterly stocks were on par with what was expected and winter wheat seedings had about the only surprise with higher SRW acres. Markets appear to remain focused on South American weather and US export sales and shipments currently, but they will likely shift toward SA harvest progress and US 2022 acreages estimates in the coming weeks. Reminder that markets will be closed on Monday, 1/17/22 for Martin Luther King Jr. Day. Hope you all have a wonderful weekend!
Vice President, Grain Division
The grain markets this week absorbed a plethora of information from the USDA as the government acknowledged what we all expected. We have ample supplies based on current demand to bridge the gap between old and new 2022 crop. With confirmation of carry-over corn stocks estimated at 1.5 billion bushels and beans 0.350, the trade will now focus on the southern hemisphere crop for price direction. As we touched on last week, much of the rally in bean price was largely due to drought conditions in southern parts of Brazil caused by continued effects of the La Nina weather event. However, we are now seeing signs of this ending and forecast for more seasonal weather and additional rainfall in Brazil. With the bullish market we witnessed in December, the funds have taken profits and now need another reason to buy. Current basis levels have been sideways-to-weaker as favorable winter weather and contracted bushels freely move to the end user when space and transportation will allow it to be delivered. Next major crop report will be the prospective planting report and stock usage for first six months of 2021-22 crop year. These figures will be released at the end of March. Please continue to be safe and have a great week.
Wes Bahan
Director of Grain Purchasing
Good afternoon. The USDA released the final production numbers from 2021, and as advertised the corn yield was a record and the soybean yield was a tie for the record. Corn yield at 193 bushels per acre and soybean yield at 56.5. On the national from the corn yield was a record at 177 bushels per acre, and the soybeans edged out last years record at 51.4 bushels per acre. Probably the most highlighted release came as Ohio’s wheat planted acreage increased 21% from last year to a whopping 700,000 acres. Even though the corn and soybean numbers were really nothing not expected they also were not anything bullish to the market either. As the market really rallied nice into the report, they now are taking a breather waiting on the next headline to determine direction. So now all eyes will be on the March 31st prospective planting report. If you did not make sales at the higher level, we are still looking at some attractive prices to make catch up sales. The market will keep close watch on the weather in Southern Brazil and Argentina over the weekend as they are expected to see some precipitation. We look to maybe have our first chance of some measurable snow over the weekend, so enjoy and have a great weekend.
Lou Baughman
Grain Origination, Kenton (Region 1)
The market is watching the South American weather very carefully. Grain markets will be closed Monday. South America’s weekend weather will determine the direction of the market come Tuesday morning. US cash bean prices will start to struggle if SA weather straightens up, and the closer SA harvest gets. For those of you with delayed price beans watch the market closely the next couple weeks you may want to sell them before they take the seasonal dip.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon. Though corn is trying to end the week on a positive note, overall, it’s been a rough week in the grain market. With ninety minutes left to trade, nearby cash corn has lost over a dime, soybeans around 40 cents, and wheat also down over a dime. The only neutral spot in the big three seems to be new corn, which sits at unchanged for the week.
On Wednesday, soybeans had a post-report whiplash. Within the first couple minutes, they were down 20, back to unchanged within the next couple minutes, then eventually up 15, ending the day up 12 ¾. That’s a good example of just how volatile markets can be on report days. Diving into the USDA reports, the domestic numbers were on the bearish side with production, carryout, and Dec 1 stocks all being a little higher than the average trade guesses. It was the bullish global numbers (mostly soybeans) that offset those and kept things neutral-to-positive. Locally, final Ohio yields this past fall ended up being records with corn at 193 BPA and soybeans 56.5 BPA.
Trader discussions are all dominated by South American weather. Thursday and Friday we’ve seen S.A. drought premiums getting extracted from soybeans as the two-week forecast for Argentina are finally calling for soaking rains. This weekend looks promising for them, but will the forecast hold true? The market is on a three-day weekend with Monday being Martin Luther King Jr Day. Monday night’s market opening will probably tell us if Argentina got rain or not. Have a great weekend and we’ll talk to you next week!
Sarah Harner
Grain Merchandiser, Marysville (Region 4
Good afternoon. A busy week hauling in January contracts in the Marysville area with the weather holding through so far to end this week. Overall, we can say the report on Wednesday was not as eventful as most predicted. It was reported that the 2021 bean crop was a record at 4.44 billion bushels, and the 2021 corn crop at its second-best crop at 15.1 billion bushels. Directly after the report market movements for corn were choppy while beans and wheat fell lower. Markets should continue to digest the report from Wednesday then most likely turn the attention back to the SA weather, specifically on the heat in Argentina and if rain truly falls there. Markets will be closed Monday for Martin Luther King Day however Heritage will still be open to get those January contracts delivered. Enjoy your weekend and be careful if the weather turns snowy this weekend.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
Happy Friday! Markets have been facing a neutral to bearish tone after Wednesday’s not-so-exciting reports (January WASDE, USDA Quarterly Stocks, and NASS Winter Wheat Seedings). USDA slightly increased corn planted and harvested acres for the 21/22 crop, but they left yield unchanged at 177.0 BPA, resulting in a slightly higher final production. As for demand, they increased ethanol and industrial estimates slightly but lowered exports due to concerns with US corn shipments meeting expectations. US bean harvested acres were lowered from 86.4 to 86.3, but we did see an increased yield of 51.4 BPA, resulting in a higher final production estimate as well with no changes made to crush, exports, or seed demand. The only slight increase was in residual.
In regards to ending stocks for both corn and beans, it appeared to be awash with higher US ending stocks and lower world ending stocks due to production cuts in South American corn and beans. Argentina has been particularly dry over the last month with crop ratings dropping 57% in beans (31% gd/ex this week) and 64% in corn (23% gd/ex this week) over the last few weeks.
Quarterly stocks were on par with what was expected and winter wheat seedings had about the only surprise with higher SRW acres. Markets appear to remain focused on South American weather and US export sales and shipments currently, but they will likely shift toward SA harvest progress and US 2022 acreages estimates in the coming weeks. Reminder that markets will be closed on Monday, 1/17/22 for Martin Luther King Jr. Day. Hope you all have a wonderful weekend!