Weekly Crop Commentary - 2/2/2024
Feb 02, 2024
Vice President, Grain Division
It appears that the groundhogs did not see their shadows, so spring, here we come. The futures markets for both corn and beans continue to struggle to gain any strength this week. Even a reported sale of old crop beans to Mexico yesterday could not spark any buying interest. As we continue to grind lower, we are still seeing open interest in the futures markets grow daily, so someone is selling the market. The managed money traders are part of that as we see in the reporting. The corn market has digested the fact that we are going to have a 2+ billion bushel carry out, and nothing currently looks to change that sentiment in anyone’s mind. We are now into the crop insurance price discovery period, and the numbers do not appear to be nearly as attractive as the last couple of years. I don’t think at this point we will see the farmer idle land as a result. Harvest in Brazil continues to make progress, and they are still priced much cheaper than U.S. beans. It feels like we continue to say the same things week in and week out, but we just can’t seem to find anything positive in this market environment.
Director for Grain Purchasing
The U.S. dollar continues to rally on better-than-expected jobs data today, which unfortunately is negatively impacting the grain markets. Not that we don’t already have enough bearish news right now. Argentina’s got a really good-looking crop on their hands and although recent estimates out of Brazil have a small reduction in production, harvest results are still off to a decent start. It appears that earlier planted beans are seeing lower-than-expected yields, however, the later planted beans are expected to make up for that. On the U.S. front, exports were lacking yet again this week.
It's certainly been another disappointing week in the grain markets. March corn made new lows on Tuesday with a little bounce back before hitting resistance from the 20-day moving average. Beans share a similar story as they make recent lows on Tuesday and testing that again today. The lack of bullish news has corn and beans struggling right now and unfortunately, I’m not seeing a lot of positives in the near future.
We’ll see if next week’s February WASDE gives us a new trend direction on Thursday. There’s a decent size gap around the $12.95 SH4 futures mark, however, I’m not sure what it’s going to take to get back there. If we were to see a headline story that justifies a strong rally this spring, I would recommend putting in a couple of target offers on the way up to that level. On the new crop corn front, CZ24 has a gap to fill around $5.02, so I’d consider putting a few targets in around $4.40, $4.50, and $4.60 for fall cash corn. New crop beans also have a gap to fill around the $12.40 range. Again, I’d consider putting in some fall cash offers around $11.75 and $11.90. Doing something is better than nothing! Evaluate your break-even numbers and work with your local merchandiser to help develop a plan that works for your operation. Don’t forget to RSVP for your local grain marketing meeting coming up this month! Looking forward to seeing you there.
Grain Merchandiser, Kenton (Region 1)
We are definitely stuck in a very tight trading range. There has not been any earth-shattering news to push it either way and there are no signs of a change soon. Traders are watching South America’s weather closely and will be looking at next Thursdays WASDE Report.
Most cargo ships are not taking the risk of traveling The Red Sea to move through the Suez Canal Increasing the freight cost by going around Africa. China is being hurt the worst, with corn and container trade.
Look for more mild temperatures for most of the U.S. this next week. Have a good weekend.
Grain Merchandiser, Upper Sandusky (Region 2)
Good afternoon, and happy Friday! February already… planters will be in the field before we know it! Shaping up to see red across the commodity board for yet another week. Beans will be taking the biggest hit this week. A couple of reasons for that. First is that exports for beans this week came in well below the trade estimates. The other reason is that bean-crushing plants in the Southeastern U.S. have purchased roughly 3 cargo ships full of beans from Brazil. It is not uncommon for America to buy beans from Brazil. However, that typically happens in the summer when our supply starts to run short. So that question becomes why would we import beans when we have an overabundance? The answer is cost; there is a $1.50 difference between Brazilian beans and American beans right now. So it is cheaper to buy beans from South America and ship them up here than it is to buy from America and have them railed in.
Now is the time to think about your 2024 crop. Start looking at the price of production and break-even points. Give us a call and we’d be happy to sit down and walk through different steps and marketing strategies to try and ensure that we reach those profit levels.
Friendly reminder that the Upper Sandusky Region Grain Market Outlook Meeting is on February 12, 2024, at the Elks. Please call the office or stop in to RSVP. RSVPs are due Thursday, February 8th! Hope everyone has a great weekend and enjoys the warm(er) weather!
Grain Operation Manager, Urbana (Region 3)
We are now into February, The weather feels more like the first week of March as the forecast is to see sunshine and highs in the 40’s next week, I will take it.
I keep getting the question from farmers when are prices going to rally. The question I ask back is why do they need to rally? We have plenty of corn, soybeans and wheat around the US and around the world. The South American soybean crop is going to be a record for total production. I hear Brazil is having issues but I remind them that Argentina is going to have double the production they saw last year. Current estimates are 220 MMT production out of South America. This is over 8 BILLION bushels. Margins around the world for crush and feeding livestock, namely in China, are not good as they have economic issues. We have soybeans coming to the east coast from Brazil and South American values today are 2.00 a bushel less than here. These companies are not importing these soybeans because we are running out of beans they are just cheaper than bringing them from the Midwest.
Corn has a similar issue, building carryout stocks, and reduced export, again China and livestock numbers are not increasing as cattle on feed are the lowest numbers since 1951. I hate having to beat the same drum that prices do not look like they are going to rise and margins on the farm are going to get tighter but as I tell customers all the time do you want me to lie to you and tell you everything is going to be sunshine and roses?
If you have not signed up for one of our marketing meetings please do so, it is always good to get information to help you make better marketing decisions. Just remember to not shoot the messenger as they are telling you what you don’t want to hear.
I have written for the last month that I do not know if it is going to pay to hold Delayed Priced grain. You may not be happy with the price today but is the market going to move enough higher to cover storage and interest cost? You need to put a plan together to get your 2023 crop sold and start looking at the crop you will start planting in the next 90 days. We can help just stop in or give us a call, sometime the best thing is to have someone push you along into doing something.
Grain Merchandiser, Marysville (Region 4)
Happy Groundhog Day! I’m happy to hear both Buckeye Chuck and Punxsutawney Phil are predicting an early spring. In the grain market this week, turn-around Tuesday gave the bulls some hope when soybeans closed 24¢ higher and corn closed 7¢ higher. Then the weekly export sales report on Thursday dashed those hopes. Soybean sales were a meager 6 million bushels when the trade estimates ranged from 18-38 million. Corn sales were at least at the high end of estimates at 47.5 million bushels.
Don’t let the brief rallies slip by when they happen. Target offers are a good way to capture your pricing goals without watching the market all day. Be sure to check out the information on our grain marketing meetings happening this month. I look forward to seeing some of you at the meeting in Plain City! Have a great weekend!