Weekly Crop Commentary - 10/7/2022

Oct 07, 2022


Ed Nienaber
Vice President, Grain Division
As we approach the end of the first week of October, we find corn futures steady and beans trading about a dime lower. Harvest activity has picked up in the east this week as combines have been very busy with the excellent weather. Cash corn basis continues to remain steady as ethanol margins and end users look for just-in-time bushels to meet nearby local demand. Soybean basis is coming under pressure with harvest ramping up and low river water levels. Barge transportation on the Mississippi River has reached levels that we have not seen since the drought year 1988. Basis at river points are at all-time lows as barge freight is trading at more than 2000% of tariff rate. This compares to 600-700% for typical harvest barge freight rates. Our concern today is the displacement of freight that this will likely cause as other means of transportation will be used to get grain to gulf ports. We could very well see interior basis levels back up in the country as harvest progresses. The USDA will release a fresh set of numbers on Wednesday at noon. With the stock numbers released last week, we are anticipating adjustments to our 2022-23 carry-over figures. It looks like the potential for another excellent week of harvesting, even though we really could use some rain. Please continue to be safe and have a great week.
 
Wes Bahan
Director of Grain Purchasing
Good afternoon. We continue to see the issues on the Mississippi River that we had last week. In fact, things seem to be getting worse. There are more reports of barge companies running out of empty barges, wreaking havoc on elevators. The north can’t ship, and the south can’t load the ocean vessels. Some are trying to convert shipments to rail, but the poor performance of the railroads will prevent that from being a legitimate alternative. Lack of power and crews already have the network at an almost standstill, so they aren’t able to handle more business. So, we could likely see the same happen to rail freight rates that we are seeing in the barge markets. Ultimately, higher freight rates lead to lower basis levels, and the pressure of harvest will also contribute to the basis falling. Corn exports out of Brazil’s Port of Paranaguá were up 1100% last month as buyers flocked to the lowest-priced corn in the world. The transportation sector is going to be challenged yet again. As we continue to see harvest progress and logistics being tested, basis levels are going to remain weak. As always, thanks for your business and have a safe weekend.

Lou Baughman
Grain Merchandiser, Kenton (Region 1)

Another week has come and gone. A few more beans were harvested this week, but area farmers are still struggling to find ripe beans. I have heard most yields are in the 70s, and they are very happy. Some who didn’t have beans ready tried corn. The samples were in 19-25% moisture, but I have also heard up to 30%. Markets have been choppy since the USDA report on the 3rd, and will continue to be range bound until the next report on the 12th.

Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)

Harvest is off to a good start in the Upper Sandusky region. Beans have been averaging around 57 TW and 12.6 MO. In conversation, most seem to be pretty happy on yields so far, with early beans averaging around the low to mid-60s. We’ll see what happens with these later beans. I’m a little concerned with the frost advisories this weekend. These weather changes are about as volatile as the grain markets lately. Corn and beans making decent gains today for a Friday. One of the big stories of the week in the grain markets has been barge freight and its continual historic highs. Low river levels on the Mississippi continue to wreak havoc on grain logistics and further impact export demand. CONAB also came out with their expectations on 22/23 bean production. They are looking at 152.35 MMT, which is up 21.3% from this past year of 125.55 MMT. A reminder that next Wednesday is the October Supply and Demand report. Have a safe weekend!

Lisa Warne
Grain Merchandiser, Marysville (Region 4)

Good afternoon from a busy Mechanicsburg! The slow beginning to harvest has finally kicked up to full speed ahead. Most customers are very happy with soybean yields so far. I’m hearing field and farm averages from the upper 50s into 70+ bushels per acre. Early corn numbers seem to be decent as well, with some running above 200 bpa. Unfortunately, we have detected some vomitoxin in a couple of customers’ corn, particularly if ear rot damage is also present. Time will tell if it turns out to be a widespread issue or limited in scope.
 
We’ve seen a mixed trade this week as the market awaits next Wednesday’s USDA S&D and yield adjustments. As of noon, corn futures have gained about six cents since last Friday, while beans are near unchanged on the week under the harvest pressure and a logjam of boats on a low Mississippi River. Export sales have been lackluster for both corn and soybeans, keeping the bulls from rallying the market. In addition to next Wednesday’s WASDE Report, it will also be National Farmer’s Day, so let me be the first to say, "thank you" and wish you a wonderful day! Have a safe weekend and see you soon.

Ralph Wince
Grain Merchandiser, Canfield (Region 5)

Good afternoon. Bean harvest has started in NE Ohio. We are not going full bore yet, but some beans are being harvested. Mostly the early-season beans. We are probably about 7-10 days away from a lot of the others being ready. Very little corn is being done yet. The crops seem to be slow to dry down this fall. It appears that cooler August and September nights helped to hold the crop back.
 
As far as prices go, corn has been in a sideways mode the last couple of weeks, and beans continue to work lower as harvest pressure continues to weigh on the market. The other big story is the water level of the river system. The Mississippi River is at or near record lows when it comes to water level. That is causing all kinds of problems in both directions. Nearby barge freight values are at all-time highs, and this could not come at a worse time. Up and down the river, elevators are trying to look at other options to move beans, and that is holding pressure on the bean basis, forcing more beans into the interior markets.
 
Lastly, the Ukraine war continues to keep the markets on edge, and this time it’s the remarks from Putin this week about using whatever means he has at his disposal to help Russia win the war that has traders concerned once again. The concern is that if Putin uses any nuclear weapons, soils in Ukraine would be contaminated for years to come, and the crops could not grow. Have a great weekend and be safe out there.

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