Weekly Crop Commentary - 1/7/2022
Jan 07, 2022
Vice President, Grain Division
Good afternoon and welcome to the winter of 2022. We got off to a slow start in Ohio with one of the warmest Decembers on record. Since we last visited, the grain markets have picked up a dollar improvement on cash beans, while the corn market has only been able to muster up a dime. While demand in both markets continues to be very strong, much of the buying in the bean pit can be attributed to fund buying due to concerns with southern hemisphere bean production. The southern growing region of Brazil and most of Argentina have been very dry for the past month and in need of precipitation. The USDA will be releasing one of the most watched crop reports on Wednesday. While we will be getting a plethora of crop information, the figures to watch will be adjustments the government makes to Brazil and Argentina estimates. The upcoming report has a history of being a market mover in past years and this year may be just that if the trade doesn’t get confirmation of weather issues down south. The rising prices are creating an increase in farm movement, causing the basis to turn soft, while the industry continues to deal with transportation issues due to the ongoing pandemic. Please continue to be safe, stay warm and have a great week.
Director of Grain Purchasing
Good afternoon and welcome back from a couple of week break. Hope you all had a great holiday season, but now it is time to get back to normalcy. It’s been a busy start to the year as nice weather has allowed a perfect opportunity for delivery of January contracts. The attractive prices are also enticing more sales as contracts get full keeping the grain deliveries going. We are continuing to hear of hot and dry weather in Argentina that is continuing to fuel the grain rally this week. We will get our ever so important January report from the USDA next Wednesday. This is typically a market moving report, and with the rally we have seen as of late I’m not sure we can news to sustain these prices. Time will tell as it always does, but regardless prices for corn and soybeans are at attractive levels. We are also starting to see more and more interest in getting fall contracts on the books as inputs from next year are being purchased. Its going to be expensive to plant crops next year, so offsetting some of that risk is not a bad idea. Please give anyone of us a call and we would like to talk over some different options with you. As always thank you for your business.
Grain Origination, Kenton (Region 1)
Another roller-coaster week in the markets. South America is having weather issues and is not looking to have any relief until maybe the middle of January.
Sales for all three commodities were terrible last week. There were a couple of flash sales this week of 176,784 tonnes of corn to Mexico, and 120,000 tonnes of new crop soybeans to an unknown destination, probably China. Next Wednesday USDA will have a lot of information coming out, monthly supply and demand, 2021 production summery, winter wheat plantings, and the quarterly stocks. Over the weekend think about putting target orders in for a few bushels, with the weather and the reports volatility in the markets.
Grain Origination, Mechanicsburg (Region 3)
Happy New Year! I hope you all had a wonderful holiday. The new year has been friendly to the corn and soybean market so far. Cash corn is up 10+ cents on the week and soybeans have gained a substantial 70+ cents. Looking at seasonal chart patterns, after MLK Jr Day, the nearby soybean futures tend to slide lower until the end of the month in 13 of the last 15 years. Something to contemplate next week if you have beans you need to sell yet this month.
AgRural and StoneX both made drastic cuts this week to their Brazil soybean production estimates due to very dry weather in southern Brazil. It’s likely USDA will also reduce South American production estimates on Wednesday’s report, but we expect them to be a much more conservative adjustment. As for U.S. production, average trade guesses for the WASDE report are marginally higher than what was released in December, but no significant changes. We’ll just have to see if USDA throws any surprises at us at Noon on Wednesday.
We saw a dismal export sales report yesterday. Compared to the prior 4-week averages, corn was down 81%, soybeans down 63% – a marketing year low, and wheat down 87%, also a marketing year low. Cumulative sales for corn versus last year are down 7%, while soybeans and wheat are both down 24% each. As South America nears soybean harvest over the next couple months, buyers will gravitate toward them. It’s uncertain if we can we make up our soybean export deficit before then. Have a great weekend and stay warm!
Grain Merchandiser, Canfield (Region 5)
Good Afternoon, and I hope everyone had a wonderful Christmas and New Year. It’s been a few weeks since we last communicated on the grain markets. We continue to see corn and beans rally. Next week on Wednesday, Jan. 12 we get the Jan update from USDA. The Jan report is noted for its surprises. Beans have rallied more than a $1.50 in a month. That has driven by a couple of things. Stone X released it bean estimate for South America this week and it did reduce the size of the crop. We also continue, sometimes on a daily basis hear concerns about inflation and there continues to be investment money moving from stocks into commodities and that continues to be supportive to the markets. Corn has not rallied nearly as much in the last month but it is .20 cents higher today. With a carryout of 1.5 billion bushels corn does not warrant being over $6.00 on the CBOT, but as we have talked in the past with record-high crop protection and fertilizer prices corn has to work to be able to get enough acres planted. If you have some soybeans to sell still I would take a look at pricing some of them. The bean market is do for a correction and that could happen at any given time. Lastly, let me say this, we talk about from time to time Black Swan events. These are things that we can’t predict. The 2 Black Swan events that I would keep in mind that could show up at any given time are these. First, China has stated that they want to bring Taiwan back into homeland and second Russia continues to move more troops onto the Ukrainian Border and one has to wonder if Russia is looking to invade Ukraine. If either of these were to happen the US has promised retaliation. What that looks like is anybody’s guess. But either of these moves could have a huge impact on prices. So stay tuned to where we go from here. Have a great weekend.
Grain Merchandiser, Marysville (Region 4
Hope everyone enjoyed the Holidays. The first week of the 2022 year is through with markets fluctuating. Weather conditions have been a huge factor affecting the grain markets. Argentina is looking toward an intense heatwave with dry conditions over the next week or so. Corn crop conditions there have decreased seeing that 40% of their corn crop is early variety that will be battling these conditions. We will be awaiting the USDA report next week with an expectation of decreases in South American crops. As for exports, there was a small bean sale to Mexico yesterday however US export sales for the week across the corn, bean and wheat markets are overall still down. For those with DP bushels out there still I recommend calling as soon as possible and set targets to get that sold. Now is also the time to start getting new sales on the book, discuss goals and set targets to lock in your sale when the market hits. Enjoy the first weekend and snow of 2022!
Grain Merchandiser, Upper Sandusky (Region 2)
Happy First Friday of 2022! Hope you all had a wonderful holiday and are staying healthy and warm! We’ve seen some strong gains made in corn and especially beans this week. March corn futures (CH2) have been pretty quiet today, but they appear to be trying to retrace their highs from last week after some year-end profit taking. As for beans, they had a strong start to the week with nearby March bean futures (SH2) up roughly 50c in two days and now up another 20c at the time of writing this. With the recently dry weather and production concerns in South America, early estimates for next week’s January 12th Supply and Demand report are showing cuts in Brazil and Argentina’s corn and bean production estimates, as well as lower world ending stocks as a result. The biggest surprise that is adding to these volatile markets, is a reversed picture on this year’s US production numbers. Early estimates are looking at slightly higher corn production and yield and lower bean production and yield, which is surprising given recent conversations with customers and the ongoing high cost of inputs. I guess we’ll have to wait and see what the USDA has up their sleeve next week. We’re likely going to remain in a volatile state into report week.
With that being said, it may be worth taking advantage of these rallies and pricing more DP bushels or look at locking in some more new crop bushels for fall. Aside from profitable fixed priced contracts, I’ve had conversations with customers this week regarding opportunities to protect their downside risk by putting floors in place. Flex floors and Guaranteed Accumulators are both great tools to help expand your marketing portfolios and help you achieve your pricing objectives! Feel free to call me at 937-460-8512 if you have any questions or interest in learning more about these types of alternative contracts! Wishing you all a blessed new year!