Weekly Crop Commentary - 11/11/2022

Nov 11, 2022


Ed Nienaber
Vice President, Grain Division

Commodity prices are finding strength today as we finish the week with positive news out of China and the on-again, off-again lockdown of the Black Sea export policy is off. Also, the dollar is weaker again today as inflation fears are easing and outside markets are seeing big gains. We are in to the final 15% of harvest in Ohio and many locations are seeing weakening basis due to transportation issues and elevators getting full. The recent rains will help the water levels and barge traffic should improve. The market attention will continue to be Eastern Europe conflict, South American weather and when will China be back in the market for commodities. After this week’s USDA supply/demand report the trade will be watching closely as we approach the January final production numbers and adjustments made to export figures if China does not resume buying in the next month. Basis levels in the west continue to trade at record levels on both corn and beans. Once logistics provides relief and harvest finishes in the east, we will begin to see improvement as well. Have a great week, stay safe and warm as winter weather is just around the corner.

Wes Bahan
Director of Grain Purchasing

What another wonderful week of weather we had. Can’t beat November with temperatures in the 70’s, but reality is coming, and normal weather will be back this weekend. We saw another week of good harvest progress, even though things slowed to end the week due to weather and logistics. The railway simply just can’t keep up, which isn’t an uncommon theme in Mid-November. Always seems that the last 15-20% of harvest is the hardest. Corn basis seems to indicate that we are in that last stretch of harvest. Conditions in the river system seem to be getting a bit better and the rains in the Ohio River Valley should be helpful. Even though we are getting some rains, the high demand for empty freight coupled with the tight supplies of diesel fuel will keep a floor under the freight market for quite some time yet.
 
We got a USDA update this week and they made no significant changes. For the most part they tweaked a few demand and production numbers to keep the ending stocks in line with previous estimates. The big news of the week seemed to be the monthly Consumer Price Index. It looks like inflation has peaked and this sparked the stock market. The grain markets seemed to be on the other side as longs liquidated positions to buy the stock market. 

Lou Baughman
Grain Merchandiser, Kenton (Region 1)

Commodities in general are getting support from the drop in the U.S. dollar today. Pressure in corn this week came from a disappointing export sales report but the trend for corn is to remain sideways. Beans are recovering from a loss yesterday. Carryout remains tight even though the USDA increased yield and production Wednesday. Russia and U.N. officials are meeting today to talk about future shipments through the Black Sea. China is easing its restrictions of the COVID zero-policy to help the economy. Brazil’s soybean crop is off to a good start even though there is concern with the forecast turning drier.

Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)

Aside from today’s rain and tomorrow’s cold front, we had a pretty good week of weather for November. Starting to see some guys get wrapped up! Overall, we’re around 90% complete on beans and 75% done on corn. Unfortunately, space continues to be a challenge at many locations this week.
 
Rail unions have kicked the can down the road, as they were expected to come to an agreement next week, however the new deadline has been pushed back to December 4th. Wednesday’s November WASDE did not result in any major market moving news. There were no changes made to US exports, however USDA increased corn and bean yields from 171.9 to 172.3 on corn and 49.8 to 50.2 on beans. In regards to Ohio, we saw corn yield lowered to 186 bpa and beans were unchanged at 55 bpa. Despite a lower US dollar on Thursday, export sales continued to fuel the questionable demand story, leading beans 30c lower. The rollercoaster continued into today though, with beans recovering yesterday’s losses as the US dollar is teetering on its largest two-day decline in nearly 14 years. This combined with China’s announcement to relax their strict zero tolerance Covid policies has led to a rebound in the grain markets. Thank you to all our veterans for your service! We appreciate and honor you today and every day! Have a great weekend!

Steve Bricher
Grain Operation Manager, Urbana (Region 3)

It has been around 6 weeks since I last wrote a commentary. I am not sure anything really has happened in the last 6 weeks (sarcasm).

For most of harvest, the corn market has traded in a 30-cent range. We have seen the market trade below that range for the last several days. A couple of things are causing us to work lower. Export sales and shipments have been bad at best. There are people starting to say we could see a reduction in exports come the January crop report if we do not see an improvement in sales. The second is general harvest pressure, as we have ripped through this harvest in 6 weeks or so and we are having logistical issues which is pressuring the market. Once harvest is complete, the farmer is going to be a reluctant seller as his cash position today is good.

Soybeans have rallied through the month of October, and we are now a dollar higher than we were in early October. Export sales have been good, and the domestic crusher is making good money crushing soybeans today so he is trying to get his hands on all that he can. Like corn the farmer is not going to be in a hurry to sell what he has in the bins today.

Six weeks ago, my comments on the railroad situation were as follows.

The industry dodged a bullet this week as the railroads and their worker unions came to an agreement. This was going to be a disaster if they would have struck for any period of time. The federal government got involved and the two sides came to an agreement.

Well, the railroad situation is now in flux. Two of the unions have voted down the contract and we are now in a ‘cooling off’ period until December 8. We will have to see how this plays out going forward. If they strike, the grain system will come to a halt. Stay tuned.

As you complete harvest, we need to start talking about pricing what you have in the bins. Give one of us a call and we can start getting offers in place to get your crop sold. As a customer often tells me, ‘I didn’t grow it to look at it.’

Lisa Warne
Grain Merchandiser, Marysville (Region 4)

Happy Veterans Day! Thank you to all who have served in our military. We appreciate your time and service. We’re closing out the week with some of the heaviest rain we’ve seen in a long time. While those of you trying to finish up harvest might’ve hoped for a longer dry spell, the US Drought Monitor shows we could certainly use the rain. Yesterday’s monitor shows most of Ohio in a moderate drought. The USDA Ag in Drought Report states 67% of US corn production area is experiencing some level of drought. Soybean area is 69% and spring wheat area is 74% in drought.
 
The market is in the green today, but we saw a lot of red on the screen earlier this week. Corn is down 3-4% from last week, while soybeans fared better – only down about 1% on the week. Today the decline in the US Dollar Index is supporting the ag markets, helping them to recover some. Yesterday the USD saw it’s biggest one-day decline since 2015. The WASDE report on Wednesday showed increased production in both corn and beans from last month. Carryout increased slightly, but not enough to make more than a ripple in the market.
 
As space is tight among many of our locations, be sure to sign up for our text alerts to get updated information on when we can accept corn and beans. Have a great weekend!

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This week, the commodity markets continued to trade range-bound with no real commitment one way or another. Harvest is rapidly finishing, and we are seeing better-than-expected yields in the eastern corn belt, however, the west has not been as fortunate.
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