Weekly Crop Commentary - 3/11/2022
Mar 11, 2022
Ed Nienaber
Vice President, Grain Division
It’s been another week of absolutely insane futures trading at the CME. We continue to trade large inverses in all feed grain and soybean markets. The values would suggest that we need the commodities now, and producers have responded to the demand. We are seeing a heavy volume of grain moving as the weather has improved, and cash prices have hit all-time highs for this time of year. The cash basis has been under pressure for much of the past three weeks. The grain transportation and infrastructure networks have been put to the test. Mainline railroads continue to deal with either lack of power or crews, and the local processor market is seeing reduced margins because of increased input cost. The USDA lowered Brazil soybean production on the latest crop report. They are currently looking at a 15-20% reduction in soybean production this year. All other numbers remain unchanged on the balance sheet. Planting intentions in US are expected to be around 92.0 million corn acres and 89.0 on beans. The USDA will be rolling out crop planting intentions at the end of the month. With all this, at the noon hour today, you can still sell corn for over $7.00 and beans over $16.00 per bushel for March-April delivery. Since the pandemic broke out two years ago this week, commodity markets have been anything but insane. Please continue to be safe and get ready for daylight savings time.
Wes Bahan
Director of Grain Purchasing
Good afternoon once again. Day light savings time is here once again finally. Don’t forget to spring forward on Saturday night. Always look forward to this time of the year. We got our monthly report from the USDA this week. Lots of adjustments were made, both to our crop and on the international stage. If we start with wheat, which seems to be the headline collector as we have noticed the last few weeks. They are expecting a decrease in exports from Russia and Ukraine totaling 7MMT. This takes the region from 29% of world exports to 25% of world exports. There is a lot of wheat in this area, so who will or can make up the gap. Australia is experiencing one of its best growing seasons and expecting a record crop, and India is ramping up exports after a good crop. Corn exports for Ukraine were decreased 6MMT taking their share of the export market to 14% from 16%, while our exports were raised by 1.9MMT. Ethanol usage here was also increased 25 million bushels reducing our ending stocks 100 million bushels. We will likely see some barley making its way into the European feed market as the high cost and availability of corn makes it unattractive. On the soybean side of things, we did see another major reduction in South American production by 8.5MMT. Strong crushing margins both domestic and internationally aren’t rationing any usage at all. The market is going to have to find some way to entice holding commodities into the summer months, and right now that will have to be done by basis. It did seem to stabilize this week, but the physical corn pipeline is full, and the transportation sector has its own stumbling blocks its working through. Trains, trucks, and barges all seem to be in short supply and at record prices if you can book any. Don’t forget that we will get our first look at Planting intentions at the end of the month.
Lou Baughman
Grain Origination, Kenton (Region 1)
If you love rollercoasters, are you loving this wild ride? This week’s USDA report was uneventful, the report that everyone is waiting for will be out high noon on the 31st. Talks between Russia and Ukraine are still going on with no outcome yet. Heritage will be having another Market Outlook Meeting Tuesday the 15th, there are quite a few spots still open if you are interested call 419-674-4045 or your local elevator. The meeting is at the Eagles (10750 St Rt 68) in Kenton at 10 am.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon! Compared to wheat, corn and soybeans have had a “quiet” week. May corn futures have seen a 52-cent trading range, May soybean futures an 84-cent range, and May wheat futures a historic $3.20 range just this week alone. That’s a wider range than the most-active wheat futures traded all of 2021.
In the early morning hours here, Russian news claimed delegations had “positive talks” with Ukraine. True or not, it caused commodity markets to falter, and the funds began taking some profit. This is an example of headlines changing markets quickly. Here at midday, though things are firming. Corn and beans look to close higher than last Friday. Yesterday’s corn and soybean export sales numbers surged above expectations. Corn weekly exports posted a marketing-year high of 84.4 million bushels and soybeans hit their second-best of the crop year at 81.0 million bushels. The excellent sales numbers are credited to Brazil’s dryness and smaller production.
Crude oil is down since last Friday by about six dollars a barrel after hitting fresh highs Monday. RBOB gasoline futures are also 32 cents off their Tuesday highs, so hopefully, we see that reflected at the pumps soon. Don’t forget to spring your clocks forward before going to bed Saturday night. I’m excited for more daylight in the evenings! Talk to you next week.
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
Hello everyone; it has been four months since my last article for the weekly newsletter. I have been recovering from an accident for the last four months. Let me tell you, that is a long time to sit and sleep in a recliner. I am on the mend but am still somewhat limited in what I can do, but at least I am able to work at my desk and talk to customers. Thanks for the phone calls and cards that were sent while I was off. I really appreciate the kind thoughts. It is great to have customers that are not just customers but that also actually care about the people they work with.
The markets, to say the least, is crazy. I have always been a supply and demand guy in the way I look at market price action, economics 101. Today we are dealing with unknown supply and a situation that none of us have seen in our lifetimes. This is causing great price swings on a second-by-second basis as we get news out of Ukraine. I do not know how this ends but it will change how the world looks at where they can get a reliable supply of grain.
If you look at where corn and soybeans prices are today, I believe you have to take a hard look at how much price risk do I want to keep on the table when cash corn is over $7.00 and cash soybeans are over $16.00. With the yields we had last fall, the revenue that we are generating per acre is as good as we have ever seen. Can you continue to hold some old crop bushels, sure; but you have to look at what is your upside gain vs. your downside risk at this point.
I know we are looking at a huge increase in the cost to put out this year’s crop, but today we have new crop values that, under normal yield conditions, will allow us to make a nice profit. With new crop corn over $6.00 and new crop soybeans over $14.00, these are good levels to help protect your revenue to cover the higher input cost.
I know none of us have a crystal ball to see what the next 9 months are going to bring, but there is an old saying, the cure for high prices is high prices. Let us realize what the market us is giving us today and be prudent in our marketing decisions.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon, here we are at the end of another trading week and for sure it has been another volatile one. We got the latest and greatest from USDA and nothing was in it that the market wasn’t looking for. But as the war in Ukraine moves forward, we continue to see the market be very concerned about where all this leads us. Today we do not have a shortage of corn or wheat but the fear of that is what has been driving the markets higher. As soon as we see something that even looks like there may be a change in this war, we see the markets pull back. That leads me to the question that I get asked every single day. How high do you think we will go? My answer is and will continue to be, I don’t know. We are in uncharted territory when it comes to this situation. What you as a farmer must decide is this. How much risk am I willing to take? If your content riding the roller coaster and seeing where this market goes that will be ok from my perspective. But if you are concerned about what comes next then I would lighten your exposure some. I do think that the market will continue to be volatile for the foreseeable future. Feel free to call any of us if you have any questions going forward. Things are changing by the second and if you have a target in mind, I suggest letting us put it in. As quickly as this market is changing you never know when it might hit. Have a great weekend. We have old man winter coming back here in NE Ohio tonight and tomorrow. We are to get 4-6 inches of snow. I don’t know anybody looking forward to that. Have a great weekend!!!!
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
We’re seeing a light snowfall this afternoon in Upper Sandusky. Hoping this may be the last time we see the “s” word this spring. Also, don’t forget to change your clocks Saturday night for Daylight Savings Time!
Markets have appeared to find a safe haven here at the end of another wild week. Dec corn is sitting unchanged at 6.52 CZ and although we’ve traded wide ranges this week, corn seems to be content around the 6.50 range right now. Similar story for beans as Nov futures are up a penny at 14.92 and have been hovering around that 15.00 mark. The USDA March WASDA was pretty uneventful this week with the US and the world carrying out on par with expectations and continued cuts to South American production. US export sales numbers appeared to help boost corn and beans on Thursday as they were above expectations. Next week we’ll have the NOPA Crush report on Tuesday 3/15.
The battle between Russia and Ukraine has continued for over 2 weeks now with no definite end in sight. Ukraine continues to stand strong and steadfast in its fight for freedom. There were rumors of a Russian News Agency reporting positive talks among the two countries, but little has been said to confirm that. Import/Export bans and sanctions continue as the world condemns Russia’s actions and works to cut them off. Hope you all have a good weekend and we’ll see what next week brings us for new headlines.
Vice President, Grain Division
It’s been another week of absolutely insane futures trading at the CME. We continue to trade large inverses in all feed grain and soybean markets. The values would suggest that we need the commodities now, and producers have responded to the demand. We are seeing a heavy volume of grain moving as the weather has improved, and cash prices have hit all-time highs for this time of year. The cash basis has been under pressure for much of the past three weeks. The grain transportation and infrastructure networks have been put to the test. Mainline railroads continue to deal with either lack of power or crews, and the local processor market is seeing reduced margins because of increased input cost. The USDA lowered Brazil soybean production on the latest crop report. They are currently looking at a 15-20% reduction in soybean production this year. All other numbers remain unchanged on the balance sheet. Planting intentions in US are expected to be around 92.0 million corn acres and 89.0 on beans. The USDA will be rolling out crop planting intentions at the end of the month. With all this, at the noon hour today, you can still sell corn for over $7.00 and beans over $16.00 per bushel for March-April delivery. Since the pandemic broke out two years ago this week, commodity markets have been anything but insane. Please continue to be safe and get ready for daylight savings time.
Wes Bahan
Director of Grain Purchasing
Good afternoon once again. Day light savings time is here once again finally. Don’t forget to spring forward on Saturday night. Always look forward to this time of the year. We got our monthly report from the USDA this week. Lots of adjustments were made, both to our crop and on the international stage. If we start with wheat, which seems to be the headline collector as we have noticed the last few weeks. They are expecting a decrease in exports from Russia and Ukraine totaling 7MMT. This takes the region from 29% of world exports to 25% of world exports. There is a lot of wheat in this area, so who will or can make up the gap. Australia is experiencing one of its best growing seasons and expecting a record crop, and India is ramping up exports after a good crop. Corn exports for Ukraine were decreased 6MMT taking their share of the export market to 14% from 16%, while our exports were raised by 1.9MMT. Ethanol usage here was also increased 25 million bushels reducing our ending stocks 100 million bushels. We will likely see some barley making its way into the European feed market as the high cost and availability of corn makes it unattractive. On the soybean side of things, we did see another major reduction in South American production by 8.5MMT. Strong crushing margins both domestic and internationally aren’t rationing any usage at all. The market is going to have to find some way to entice holding commodities into the summer months, and right now that will have to be done by basis. It did seem to stabilize this week, but the physical corn pipeline is full, and the transportation sector has its own stumbling blocks its working through. Trains, trucks, and barges all seem to be in short supply and at record prices if you can book any. Don’t forget that we will get our first look at Planting intentions at the end of the month.
Lou Baughman
Grain Origination, Kenton (Region 1)
If you love rollercoasters, are you loving this wild ride? This week’s USDA report was uneventful, the report that everyone is waiting for will be out high noon on the 31st. Talks between Russia and Ukraine are still going on with no outcome yet. Heritage will be having another Market Outlook Meeting Tuesday the 15th, there are quite a few spots still open if you are interested call 419-674-4045 or your local elevator. The meeting is at the Eagles (10750 St Rt 68) in Kenton at 10 am.
Lisa Warne
Grain Origination, Mechanicsburg (Region 3)
Good afternoon! Compared to wheat, corn and soybeans have had a “quiet” week. May corn futures have seen a 52-cent trading range, May soybean futures an 84-cent range, and May wheat futures a historic $3.20 range just this week alone. That’s a wider range than the most-active wheat futures traded all of 2021.
In the early morning hours here, Russian news claimed delegations had “positive talks” with Ukraine. True or not, it caused commodity markets to falter, and the funds began taking some profit. This is an example of headlines changing markets quickly. Here at midday, though things are firming. Corn and beans look to close higher than last Friday. Yesterday’s corn and soybean export sales numbers surged above expectations. Corn weekly exports posted a marketing-year high of 84.4 million bushels and soybeans hit their second-best of the crop year at 81.0 million bushels. The excellent sales numbers are credited to Brazil’s dryness and smaller production.
Crude oil is down since last Friday by about six dollars a barrel after hitting fresh highs Monday. RBOB gasoline futures are also 32 cents off their Tuesday highs, so hopefully, we see that reflected at the pumps soon. Don’t forget to spring your clocks forward before going to bed Saturday night. I’m excited for more daylight in the evenings! Talk to you next week.
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
Hello everyone; it has been four months since my last article for the weekly newsletter. I have been recovering from an accident for the last four months. Let me tell you, that is a long time to sit and sleep in a recliner. I am on the mend but am still somewhat limited in what I can do, but at least I am able to work at my desk and talk to customers. Thanks for the phone calls and cards that were sent while I was off. I really appreciate the kind thoughts. It is great to have customers that are not just customers but that also actually care about the people they work with.
The markets, to say the least, is crazy. I have always been a supply and demand guy in the way I look at market price action, economics 101. Today we are dealing with unknown supply and a situation that none of us have seen in our lifetimes. This is causing great price swings on a second-by-second basis as we get news out of Ukraine. I do not know how this ends but it will change how the world looks at where they can get a reliable supply of grain.
If you look at where corn and soybeans prices are today, I believe you have to take a hard look at how much price risk do I want to keep on the table when cash corn is over $7.00 and cash soybeans are over $16.00. With the yields we had last fall, the revenue that we are generating per acre is as good as we have ever seen. Can you continue to hold some old crop bushels, sure; but you have to look at what is your upside gain vs. your downside risk at this point.
I know we are looking at a huge increase in the cost to put out this year’s crop, but today we have new crop values that, under normal yield conditions, will allow us to make a nice profit. With new crop corn over $6.00 and new crop soybeans over $14.00, these are good levels to help protect your revenue to cover the higher input cost.
I know none of us have a crystal ball to see what the next 9 months are going to bring, but there is an old saying, the cure for high prices is high prices. Let us realize what the market us is giving us today and be prudent in our marketing decisions.
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon, here we are at the end of another trading week and for sure it has been another volatile one. We got the latest and greatest from USDA and nothing was in it that the market wasn’t looking for. But as the war in Ukraine moves forward, we continue to see the market be very concerned about where all this leads us. Today we do not have a shortage of corn or wheat but the fear of that is what has been driving the markets higher. As soon as we see something that even looks like there may be a change in this war, we see the markets pull back. That leads me to the question that I get asked every single day. How high do you think we will go? My answer is and will continue to be, I don’t know. We are in uncharted territory when it comes to this situation. What you as a farmer must decide is this. How much risk am I willing to take? If your content riding the roller coaster and seeing where this market goes that will be ok from my perspective. But if you are concerned about what comes next then I would lighten your exposure some. I do think that the market will continue to be volatile for the foreseeable future. Feel free to call any of us if you have any questions going forward. Things are changing by the second and if you have a target in mind, I suggest letting us put it in. As quickly as this market is changing you never know when it might hit. Have a great weekend. We have old man winter coming back here in NE Ohio tonight and tomorrow. We are to get 4-6 inches of snow. I don’t know anybody looking forward to that. Have a great weekend!!!!
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
We’re seeing a light snowfall this afternoon in Upper Sandusky. Hoping this may be the last time we see the “s” word this spring. Also, don’t forget to change your clocks Saturday night for Daylight Savings Time!
Markets have appeared to find a safe haven here at the end of another wild week. Dec corn is sitting unchanged at 6.52 CZ and although we’ve traded wide ranges this week, corn seems to be content around the 6.50 range right now. Similar story for beans as Nov futures are up a penny at 14.92 and have been hovering around that 15.00 mark. The USDA March WASDA was pretty uneventful this week with the US and the world carrying out on par with expectations and continued cuts to South American production. US export sales numbers appeared to help boost corn and beans on Thursday as they were above expectations. Next week we’ll have the NOPA Crush report on Tuesday 3/15.
The battle between Russia and Ukraine has continued for over 2 weeks now with no definite end in sight. Ukraine continues to stand strong and steadfast in its fight for freedom. There were rumors of a Russian News Agency reporting positive talks among the two countries, but little has been said to confirm that. Import/Export bans and sanctions continue as the world condemns Russia’s actions and works to cut them off. Hope you all have a good weekend and we’ll see what next week brings us for new headlines.