Weekly Crop Commentary - 1/20/2023
Jan 20, 2023
Vice President, Grain Division
Well, here we are at the end of yet another week. Hard to believe we’re into the back half of January. Last week the markets ended the week on fire from the USDA reports and they continued into the start of this week. As midweek rolled around, they experienced a resistance that appears to be to holding at this time. They just could not punch though and that has led to a sell off to end the week. Farmers were active sellers before the down turn as they took advantage of locking in some fancy profits. That seemed to be the case most everywhere as processors around the state were able to extend coverage, allowing them to ease up on the basis levels they were paying. The same can be said for the rail markets as they seem to have ample coverage in place and have been rather stagnant all week. Export shipments of corn this week rebounded nicely, but we are some 230 million bushels behind last year’s shipping pace. Corn sales for the week were also up sharply and it even included cargo for China in the report. Soybean shipments for the week topped the 2MMT mark, and almost 70% of those were destined for China. The Chinese will be absent from the markets for the next couple of weeks as they observe the new year. It appears that Argentina is forecasted to see some welcomed rains next week. The market will be watching that closely as well as harvest activity in Brazil.
Director of Grain Purchasing
The grain markets saw some follow through from last week’s January WASDE to start the short trading week and it pushed us up to 3-month highs for nearby corn and 7-month highs on nearby beans. From a technical standpoint, it looks like SH23 beans filled a gap this week from back in late June 2022. However, the wind was quickly taken out of the sail midweek, as the bulls lacked fresh demand news and Argentina’s forecast saw its first favorable two-week forecast of the growing season. We’ll continue to keep an eye on Brazil’s harvest progress and South American weather over the next couple of weeks, as news from China will be quiet with the start of their new year on 1/22 and holiday celebrations through 1/27. With the incoming snow forecasted for Sunday, don’t forget to re-evaluate your marketing plans, and reach out to your local merchandiser next week to put in offers on old crop and new crop! Hope you all have a wonderful weekend!
Grain Merchandiser, Kenton (Region 1)
Markets are struggling this week after last week’s report. South America’s weather has turned around giving Argentina desperately needed moisture. The question now is, did it come in time to help their crops? Buenos Aires’ grain exchange cut the Argentina corn production 7.5-million-ton on Thursday. US planting acreage estimates are starting to emerge. One of the surveys conducted by Farm Futures magazine has corn acreage increasing 2.2%, bean acreage increasing 1.7%, and wheat 7% from last year. China will be celebrating the Lunar New Year, shutting down their government for the week. I want to thank our customers for promptly returning the information needed to issue RFID cards for Kenton’s new scale system. Unfortunately, it will be at least three more weeks until we will be close to using it. Please be patient as we learn the ins and outs of the new routine.
Grain Merchandiser, Upper Sandusky (Region 2)
We started the short trading week with the bulls still running as a result of the USDA report but ended with the bears crawling back. As it stands, we ended this week with corn up 3 cents, beans down 10 cents, and wheat down 6 cents from Tuesday’s opening.
Brazil is getting rain Thursday-Saturday for the Central Region of the country but continues to remain dry in the South. Argentina is also receiving some rain to help with their drought problem; question remains whether it is too late? Brazil will make up for some but not all of Argentina’s bean crop loss, as positive reports of their crop continue to come out.
For Upper Sandusky, with corn prices hovering above 6.50 and beans above 14.80 it would not be a bad idea to move some grain or get some target orders in. Give us a call and we’ll be happy to help get an order in. Hope everyone has a great weekend!
Grain Operation Manager, Urbana (Region 3)We cannot complain about the weather we have had so far this January. We are getting moisture in the ground, and we don’t have to shovel it.
The corn and soybean markets traded to multi-month highs earlier in the week, then proceeded to fall back. We saw some follow through buying on Tuesday from the crop report, then we lost momentum. We have seen markets trade lower the last few days. Without much news to feed the mark, in the form of export sales or new production issues, we have seen the markets want to work lower.
The other item that is causing the markets to not work higher is the lack of interest in trading in our markets. Daily trade volume and open interest are low, so we are not seeing the big swings that we saw last year at this time.For the crop you have in the bin, the market is not giving you any carry, so the futures are going to have to rally for it to pay to continue to carry this crop. The other thing you need to look at is cost of money as we all have seen interest rates rise, you can get interest on money today, or if you are borrowing money the cost is real. Today, if you are borrowing operating money, it will cost you 4 cents per month on corn and close to 9 cents a month to carry soybeans. You will want to ask yourself is the risk worth the reward.
Grain Merchandiser, Marysville (Region 4)
It’s been a prime example of January weather in Ohio this week, 60 degrees one day and 30s with snow showers the next. Tuesday saw a nice bump in the grain market with better-than-expected grain export inspections for both corn and soybeans, despite a lower soybean crush figure for December. By Wednesday, a wetter forecast pattern in Argentina reversed the gains. Corn and wheat are near unchanged on the week, while soybeans are looking at a loss around twenty cents on old crop, forty on new crop.
Data on China’s corn imports from all destinations was released earlier in the week, with their year-to-date figure down 27% from a year ago. USDA is projecting a decline of 18% for China’s corn imports this year. China started their aggressive corn importing in 2020, but it has declined each year after. Was that a one-year anomaly and they’re going back to those pre-2020 levels? They certainly didn’t buy as much in December as they did the year prior.
At Marysville, cash beans rallied to 15.23 this week and cash corn reached 6.77 for a high. February delivery bids are a few cents higher, as well. Sometimes these rallies happen fast or in the overnight session. If you have target prices in mind, let us know so we can keep an eye on them for you. Have a great weekend!