Weekly Crop Commentary - 2/25/2022
Feb 25, 2022
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
It was a short trading week with the holiday Monday, but it sure was filled with shockwaves. We’re seeing huge money flow in both directions as traders digest the headlines. The Russian invasion of Ukraine makes it difficult to determine fair values across all sectors, creating an aggressively volatile market. In the last two days, we’ve seen over a 60 cent range in nearby corn, 1.70 range in nearby soybeans, and 1.35 range in July wheat.
As I mentioned last month, Ukraine is a top-four exporter of several agriculture products, including corn, wheat, and sunflower oil. Combined, Russia and Ukraine account for 20% of global corn, 30% of global wheat, and 80% of global sunflower oil supplies. Yesterday, the Ukrainian military suspended operations at their ports. The long-term effects on world grain trade are going to take time to ascertain. In the meantime, it’s likely we experience more unpredictability like we’ve seen the last two days.
Domestically, this week’s drought monitor indicated 73% of U.S. winter wheat growing areas are experiencing some level of drought. That is a 1-point increase from the previous week. Corn growing areas experiencing drought is 31%, four points higher than the same time last year.
USDA released preliminary acreage forecasts for the new crop at the Ag Outlook Forum yesterday. Corn is spot on with baseline forecasts at 92.0 million acres, 1.4 less than last year. Soybeans are pegged at 88.0 million acres, half a million above baseline, and 0.8 million more than last year, but lower than the average trade guesses from analysts.
Remaining seats for Tuesday’s Grain Market Outlook meeting in Plain City is limited, so if you haven’t RSVP’d or need to change your reservation, please let me know: lwarne@heritagecooperative.com or 937-834-2416. Have a good weekend and I’ll see some of you Tuesday!
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon and what a week it has been. We are living in a time of uncertainty at the moment. With that comes some volatility for the grain markets as we have seen recently. Yesterday’s trade-in Nov-22 soybeans saw a $1.10 swing between the high and the low. The wheat market was limit up yesterday at +.50 cents and today as we went to expanded limits, we are currently seeing May wheat down -.70 cents a bushel. I have also heard today that suppliers of fertilizer have gone to no bids. So what are we to make of all of this? My take is this, nothing has really changed fundamentally in the markets but we have an elevated risk about whether supplies of corn & wheat will be able to flow out of the Black Sea Region going forward. Until we have a better idea on what that will be we will continue to see the grain markets stay on edge and huge swings on any given day are possible. Yesterday we had over 40 open targets get filled on the overnight markets. That was a huge number. My advice to all of you out there is this. Please give any of us a call to discuss the current situation and then put in an open order to price some grain that best fits your current circumstances and have an order working so that you get filled if the markets take off. The eastern region will be having 2 Outlook Meetings on March 8th, 2022. One at our New Philadelphia location at 11:30 am and one near our Canfield location at A la Cart Catering at 5:30 pm. Please call Barb Stryffeler at 1-8444-229-2252 Ext 318 if you would like to come. Have a great weekend.
Sarah Harner
Grain Merchandiser, Marysville (Region 4)
Many of you woke up very differently on Thursday morning to the $7 corn, $17 soybeans, $10 wheat than you have today. The Ukraine/Russia situation escalating is the leading headline putting the South American weather on the backburner. The Black Sea was hit with several projectiles, risking commodity freight movement. The million-dollar question is what the 2022 crops in Ukraine will truly come to produce after Russian disruptions? There will continue to be extreme volatility throughout the markets as Russia continues to invade Ukraine. Putting in targets with your merchandiser can help lock in those profits when the very uncertain market hits your desired price level. It's been a pleasure to get to know you all, but this will be the last time I write to you all, as I have decided to pursue another journey in life. I pray for a profitable growing season for each farmer out there. Please direct your business toward Haylee VanScoy, Wes Bahan, or Lisa Warne. Thank You for your business.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
Month-end has quickly fallen upon us after a wild ride this week! Today’s markets are sharply off yesterday’s highs with nearby corn down 33c, beans down 64c, and wheat down 74c at the time of writing this. When the announcement came early Thursday that Russia invaded Ukraine on multiple fronts, the world markets went haywire; grain skyrocketed in the overnight market, crude oil traded $100 per barrel, and the US dollar and metals traded higher as well. Today the markets have digested the initial shock and we’ve seen a bit of a reversal. Putin has announced that he is willing to meet with Ukrainian leaders to negotiate, so hold onto your hats again next week to see what the next move is. China and Taiwan are also a black cloud looming in the distance as Taiwan’s defense ministry had to intercept Chinese military planes that were inside Taiwan’s airspace. On a positive note, US export sales came out this morning and exceeded estimates across all three commodities. Concerns with South America have been put to the wayside this week as Argentina has seen increased rains in the forecast and Northern Brazil is forecasted to have drier conditions next week that will allow them to have another stretch of nice weather to make a good dent in their harvest progress. The USDA Ag Outlook forum also put out estimates for US acreage this year coming in at 92 mil acres of corn vs. 93.4 ly and 88 mil acres of beans vs 87.2 ly. Volatility remains high in the coming weeks, so it’s important to know where your cost of production is, know where you’re at with your percentage sold on your grain sales, and know where you can manage to take some risk off the table. It is hard to know for sure what will happen next with these grain markets, but remember that we can help you manage some of that risk by putting in targets to minimize missing out on an opportunity or by utilizing contracts that allow you to put a floor in place. Feel free to call with any questions! Hope you all have a wonderful weekend!
Grain Origination, Mechanicsburg (Region 3)
It was a short trading week with the holiday Monday, but it sure was filled with shockwaves. We’re seeing huge money flow in both directions as traders digest the headlines. The Russian invasion of Ukraine makes it difficult to determine fair values across all sectors, creating an aggressively volatile market. In the last two days, we’ve seen over a 60 cent range in nearby corn, 1.70 range in nearby soybeans, and 1.35 range in July wheat.
As I mentioned last month, Ukraine is a top-four exporter of several agriculture products, including corn, wheat, and sunflower oil. Combined, Russia and Ukraine account for 20% of global corn, 30% of global wheat, and 80% of global sunflower oil supplies. Yesterday, the Ukrainian military suspended operations at their ports. The long-term effects on world grain trade are going to take time to ascertain. In the meantime, it’s likely we experience more unpredictability like we’ve seen the last two days.
Domestically, this week’s drought monitor indicated 73% of U.S. winter wheat growing areas are experiencing some level of drought. That is a 1-point increase from the previous week. Corn growing areas experiencing drought is 31%, four points higher than the same time last year.
USDA released preliminary acreage forecasts for the new crop at the Ag Outlook Forum yesterday. Corn is spot on with baseline forecasts at 92.0 million acres, 1.4 less than last year. Soybeans are pegged at 88.0 million acres, half a million above baseline, and 0.8 million more than last year, but lower than the average trade guesses from analysts.
Remaining seats for Tuesday’s Grain Market Outlook meeting in Plain City is limited, so if you haven’t RSVP’d or need to change your reservation, please let me know: lwarne@heritagecooperative.com or 937-834-2416. Have a good weekend and I’ll see some of you Tuesday!
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon and what a week it has been. We are living in a time of uncertainty at the moment. With that comes some volatility for the grain markets as we have seen recently. Yesterday’s trade-in Nov-22 soybeans saw a $1.10 swing between the high and the low. The wheat market was limit up yesterday at +.50 cents and today as we went to expanded limits, we are currently seeing May wheat down -.70 cents a bushel. I have also heard today that suppliers of fertilizer have gone to no bids. So what are we to make of all of this? My take is this, nothing has really changed fundamentally in the markets but we have an elevated risk about whether supplies of corn & wheat will be able to flow out of the Black Sea Region going forward. Until we have a better idea on what that will be we will continue to see the grain markets stay on edge and huge swings on any given day are possible. Yesterday we had over 40 open targets get filled on the overnight markets. That was a huge number. My advice to all of you out there is this. Please give any of us a call to discuss the current situation and then put in an open order to price some grain that best fits your current circumstances and have an order working so that you get filled if the markets take off. The eastern region will be having 2 Outlook Meetings on March 8th, 2022. One at our New Philadelphia location at 11:30 am and one near our Canfield location at A la Cart Catering at 5:30 pm. Please call Barb Stryffeler at 1-8444-229-2252 Ext 318 if you would like to come. Have a great weekend.
Sarah Harner
Grain Merchandiser, Marysville (Region 4)
Many of you woke up very differently on Thursday morning to the $7 corn, $17 soybeans, $10 wheat than you have today. The Ukraine/Russia situation escalating is the leading headline putting the South American weather on the backburner. The Black Sea was hit with several projectiles, risking commodity freight movement. The million-dollar question is what the 2022 crops in Ukraine will truly come to produce after Russian disruptions? There will continue to be extreme volatility throughout the markets as Russia continues to invade Ukraine. Putting in targets with your merchandiser can help lock in those profits when the very uncertain market hits your desired price level. It's been a pleasure to get to know you all, but this will be the last time I write to you all, as I have decided to pursue another journey in life. I pray for a profitable growing season for each farmer out there. Please direct your business toward Haylee VanScoy, Wes Bahan, or Lisa Warne. Thank You for your business.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
Month-end has quickly fallen upon us after a wild ride this week! Today’s markets are sharply off yesterday’s highs with nearby corn down 33c, beans down 64c, and wheat down 74c at the time of writing this. When the announcement came early Thursday that Russia invaded Ukraine on multiple fronts, the world markets went haywire; grain skyrocketed in the overnight market, crude oil traded $100 per barrel, and the US dollar and metals traded higher as well. Today the markets have digested the initial shock and we’ve seen a bit of a reversal. Putin has announced that he is willing to meet with Ukrainian leaders to negotiate, so hold onto your hats again next week to see what the next move is. China and Taiwan are also a black cloud looming in the distance as Taiwan’s defense ministry had to intercept Chinese military planes that were inside Taiwan’s airspace. On a positive note, US export sales came out this morning and exceeded estimates across all three commodities. Concerns with South America have been put to the wayside this week as Argentina has seen increased rains in the forecast and Northern Brazil is forecasted to have drier conditions next week that will allow them to have another stretch of nice weather to make a good dent in their harvest progress. The USDA Ag Outlook forum also put out estimates for US acreage this year coming in at 92 mil acres of corn vs. 93.4 ly and 88 mil acres of beans vs 87.2 ly. Volatility remains high in the coming weeks, so it’s important to know where your cost of production is, know where you’re at with your percentage sold on your grain sales, and know where you can manage to take some risk off the table. It is hard to know for sure what will happen next with these grain markets, but remember that we can help you manage some of that risk by putting in targets to minimize missing out on an opportunity or by utilizing contracts that allow you to put a floor in place. Feel free to call with any questions! Hope you all have a wonderful weekend!