Weekly Crop Commentary - 1/21/2022

Jan 21, 2022


Weekly Crop Commentary - 1/21/2022
Ed Nienaber
Vice President, Grain Division
The commodities futures market had a very good week with soybeans trading close to fifty cents higher and corn looking at a twenty-cent gain. The southern hemisphere weather continues to be a concern; while they saw some precipitation this week, there were also 100+ temperatures in the southern growing regions keeping funds engaged. Unexpected export demand from China, as they look to bridge the gap between US beans and Brazil harvest, has brought additional buying into the bean pit. Transportation issues seem to be improving with excellent crush margins in soybeans, as well as ethanol demand, local basis remains firm. The geopolitical climate continues to be a concern with China not meeting phase one agreement and tariff discussions, as well as the ongoing Russia-Ukraine conflict and how this will affect world trade. Moving into February we will begin to hear talk about spring planting intentions as private forecasters roll out their acreage numbers. The USDA will release anticipated 2022 acreage numbers at the end of March along with grain stock figures. Please continue to be safe, stay warm, and have a great week.
 
Wes Bahan
Director of Grain Purchasing
Good afternoon. What a week we had.  The weather in southern Brazil and Argentina continued to be in the forefront. They do have better chances for rain in Argentina soon, but southern Brazil looks to see continued dryness. This caused the futures market to rally back to the highs from late December, but we seem to be faltering there. This made for some heavy movement from the farmers this week. The more intriguing thing this week was we did not see any weakness in basis levels with the futures rally and the heavy cash movement from producers. We are seeing bean basis get a bit stronger. The struggles to move grain in the river system continue as ice problems, and low water levels continue to push the cost of empty barges to stay high. There were also reports of heavy Chinese grain purchases from the US this week, but as of this morning I have only seen confirmation of two soybean vessel purchases. If we don’t see more confirmations early next week the market could be in a buy the rumor sell the fact mentality.   
 
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)

Greetings! It was a short trading week with the holiday Monday, but it sure was action-packed! Nearby corn had a 29-cent trading range, looking to finish the week 20 cents higher than last Friday. Nearby soybeans ranged 80 cents, approaching the close 45 cents higher on the week. While July wheat traded 56 cents and will likely close the week 40 higher.

South American weather and production, in addition to China purchase rumors, were big driving factors midweek. Although some rain has fallen in Argentina and other parts of South America, it’s clear they will not have the record production once thought. Brazilian farmers are reluctant to sell their new crop, waiting on higher prices. This may extend U.S.’s window for possible soybean sales to China if they hold out selling too long. It was rumored yesterday that China may have bought 1.5+ million metric tons of soybeans and 1.3 MMT of corn, but there was no confirmation of that in today’s USDA flash sale announcements. The lack of verification and some profit-taking is driving soybeans into negative territory for the day.

The market may continue to be volatile as there are many evolving headlines including dry weather, both U.S. and S.A., tensions between Russia and Ukraine, inflation, uneasy macro markets, and possible sales to China. If we reach your goal price level on either old crop or new, be sure to take advantage of it by selling at least some bushels. Have a great weekend!

Ralph Wince
Grain Merchandiser, Canfield (Region 5)

Good afternoon, it's been a few weeks since I have last written in this column. The markets have continued to work their way stronger. Now that we have the big USDA Jan report behind us and with no big surprises in that report the market will go back to watching fundamentals as well as outside forces. On the bean side, we have seen us bounce back from the sell-off that we saw right after the Jan report to levels that we had not seen trade in the March bean contract. This week we saw China slide back to purchase some beans out of the U.S. as Brazil farmers appeared to pull back from selling any more NC bushels until they see if the current weather forecast plays out. That drove China back to the U.S. for some more purchases as it appears China is looking to build back some in their reserves. One has to question why China is looking to build the reserves back up right now. It has been speculated that sometime this year China will make a move to reunite Taiwan with the China homeland. If that were to happen that could send the bean market to the downside very quickly as we would expect the U.S. to move to enforce some degree of sanctions. Only time will tell how this all plays out. Moving to the corn market, we continue to see March corn trade above the $6.00 mark. Corn appears to have solid support right now at these current levels. The wild card in the corn market could very well be another developing story that has moved to the forefront in the news. Russia’s build-up of troops on the Ukrainian border. Only Putin knows what his thoughts are about invading Ukraine, but if that happens the could very easily disrupt exports of corn & wheat out of the Black Sea region. That would also send some of those countries looking to source corn and wheat elsewhere and that could be here in the U.S. If that were to happen the corn and wheat markets could make a run higher. Only time will tell on this. I still feel that the corn market needs to stay supported for the next few months to ensure that the U.S. plants 91-92 million acres of corn this spring. I hope all of you stay warm as we see some of the coldest weather we have seen in a few years. We will talk to you all again 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.
 

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