Weekly Crop Commentary - 12/16/2022

Dec 16, 2022

Wes Bahan
Director of Grain Purchasing
Good afternoon. This was a quiet week compared to last week. Last week brought multiple sale confirmations daily, but this week we had one corn and one bean sale confirmation. So, either the market is in the beginning of the holiday mode, or sales are not big enough to reach the reporting threshold. One could argue that processors have bought enough that they feel comfortable with their ownership for the holiday season. Typically, we have a lot of physical movement once the calendar hits January. Not only are we seeing a lack of participation in the cash markets, but the futures markets are also lacking volume and open interest is very low. What will the January final production and grain stock reports reveal? Those questions followed by many being off work for the remainder of the season seem to be part of the reason for the participation issue. One thing to remember as we are getting to the season of buying inputs is that we have December corn futures close to $6 and November bean futures close to $14. Those are historically good levels to offset some of the risk that is starting to mount. 
Speaking of the holiday season this will be our last writing of the year as we too will be short staffed the next couple weeks while employees share time with their families over the holidays.
Lou Baughman
Grain Merchandiser, Kenton (Region 1)
As we wait for any changes in the January USDA report, eyes will be on South America’s weather, the ongoing war between Russia and Ukraine, and demand potential. The markets feel stable and will stay range bound until 2023 but the hope that year-end position squaring may spur a spark to rally for producers to let go of some bushels before the end of the year. Other than that, markets and traders seem to have started their holiday mode. Have a good weekend.

Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
Happy Friday! Hope you all are getting in the holiday spirit with Santa coming to town next week. I know I sure have a lot of wrapping to finish. Beans have traded in a 30c range, but have finished off the week nearly unchanged. Corn on the other hand has been pretty quiet despite export sales exceeding expectations this week. USDA is showing corn 13% behind the pace needed to meet USDA estimates. Beans however, are currently ahead of pace by 7% as we continue to see China make some bean purchases, but will this be short-lived as South America’s crop comes into play after the start of the year? Argentina is still facing drought concerns in many areas, however Brazil appears to be picking up the slack to offset any major concerns at this point. As you wrap up the year, please let us know how we can help with deferred payments, end of year reports, and evaluating your old crop and new crop marketing plans! Wishing you all an early Merry Christmas and Happy New Year!

Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Only eight days of shopping left before Christmas, y’all. I’ve got some work to do before then! The grain market has been stuck in a span of 15 cents for corn and 30 cents for soybeans. Trade volume is getting thinner each day as we get closer to the holiday, as well. January soybean futures have a hard ceiling near 14.90 that it just can’t break. Meanwhile, corn is lacking any fundamental motives for a rally.
In South America, the Buenos Aires Grain Exchange reports that Argentina soybean planting is 51% complete, down 14 points from last year. The “core agricultural zone” is 20-22% behind pace. The recent rains they received have not been enough though. Argentina is the world's largest soybean meal exporter. So, while their drought is concerning, we must keep in mind that Brazil is looking at a possible record crop that could offset the lack of production that Argentina faces. We will have to see how the season progresses in the southern hemisphere.
I will be using a vacation day next Friday, so allow me the opportunity now to wish you and your family a Merry Christmas! The forecast looks like we could have a white holiday this year, so travel safe and stay warm.

Steve Bricher
Grain Operation Manager, Urbana (Region 3)
The corn and soybean markets are like the night before Christmas, quiet. We are trading in a small range for these markets compared to where we were earlier in the fall.
There is not much current news to make the markets react. South America received rain over the last seven days. We saw a better export sales number on corn and soybeans this week and we have seen our first winter storm move across the upper Midwest. We will have to see what the new year brings to the markets with what is going on in China and how the crop progresses in South America.

Just a reminder if you need money deferred or if you want to receive it in 2022, please let us know next week. The deferred checks are normally processed the week between Christmas and New Year.
I know we don’t say this enough but thank you for your business. I wish your family a Merry Christmas and a Happy New Year.

Ralph Wince
Grain Merchandiser, Canfield (Region 5)

Good afternoon. It’s been a few weeks since I have submitted comments on our weekly update. Today I would like to comment a little more in detail as to what I am seeing from the export side on soybeans. If you have not heard, China has done a 180 degree turn on its stance about Covid. They finally lifted their restrictions that have been in place for the last 3 years. China had been taking a zero-tolerance position since the beginning of the Covid pandemic and people were locked down and there had been very little movement across the country. Now that people are moving about, we are seeing an uptick in cases. China expects that we will see somewhere between 12% to 20% of its population become hospitalized and somewhere between 1.3 and 2.1 million casualties. What is mind boggling to me is that those casualties will only represent about 0.1% of China’s population. China knows that in the short term this will affect their economy and just this week they have issued what they call a “Special Bond” worth 750 billion yuan (US $107 billion) which basically is them pumping more stimulus into their economy. The reason I say all of this is because in the end we will see China have a much stronger demand for commodities, one of those being soybeans in the last half of 2023. The question now is where do those beans come from? China will prefer to get them from South America, but they will more than likely source some from the U.S. For now, we will sit back, wait, and see. My take on the bean market in the short term is this: If beans are going to move higher and through the $15.00 mark on the CBOT, we will need some help on the demand and weather fronts in South America.  Beans have not been at this level on the CBOT since the first part of September. If you have some beans to sell yet I would look at moving some of them while we are at this level and maybe get some targets in at higher levels. Have a great weekend!

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