Weekly Crop Commentary - 9/30/2022

Sep 30, 2022


Ed Nienaber
Vice President, Grain Division
Grain prices have traded in a very narrow range this week, with corn down a nickel and beans off about a dime. The markets have traded both sides of unchanged with the anticipation of the USDA quarterly stocks report today. The rising dollar value vs. foreign currency, continued conflict in Eastern Europe, China’s lack of buying, and South America’s 2023 bean crop potential, all have the trade on edge. The Midwest has been very busy with harvesting, while the below-normal temperatures and occasional rain has slowed Ohio harvesting. We continue to see a few premiums for quick shipment bushels, but they are quickly ending. The low river levels on the Mississippi River are causing issues with barge freight, and we’ve seen nearby prices go to an all-time high this week. Basis levels this fall will be affected more by the increased cost to move bushels and lack of physical conveyances. The demand will continue to support cash prices as we move throughout the marketing year - I believe you will see that in today’s crop report. However, getting it to the end user will be our biggest challenge. It looks like we should see very good harvest weather in the coming days. Please continue to be safe and have a great first week of October!
 
Wes Bahan
Director of Grain Purchasing
What a week to end September? Fall-like temperatures, a macroeconomic meltdown in Great Britain, a hurricane, Mississippi river level at historic lows, and another 2.9 bushel per acre corn yield reduction. To begin the week, we saw the dollar index soar against the British pound, so much that the CME did halt trading in that futures market. Dollar appreciation makes our products more expensive to the rest of the world, and the US was already the highest-priced corn globally.
 
Even though Hurricane Ian isn’t really affecting our weather, it is, however, impacting rail traffic in the south, causing bottlenecks in an already fragile transportation network. The lower Mississippi River is at some of the lowest levels ever recorded. Barge loaders must reduce the amount of product loaded, and tow companies have to reduce their tow sizes in order to make the loads float higher to avoid running aground. Some loads in the Cairo, Illinois area have run aground, and now they have to offload some product to make them float again. This has caused barge freight to explode to record levels as the number of empty barges continues to be limited.
 
So, what does this mean? Most of the grain exports are loaded off the Mississippi River in the New Orleans area. Less product on barges means more barges to load a ship. Smaller tow sizes mean more tows to load a ship. With no real chances for precipitation in the area, it doesn’t appear the conditions are going to improve anytime soon. As the cost for an empty barge rises, the basis gets cheaper to offset that. If the basis levels on the river get cheaper, then grain moves to other spots decreasing their need to pay a higher price for the same products. Now, we have a rail network that is seeing movement disruptions from Hurricane Ian, and the rail network has struggled to regain efficiency since the COVID pandemic hit. However, we did get a stoke of positive news for corn prices from the USDA today as they did reduce the corn yield once again. The weather forecast for next week looks favorable for harvest, and let's be honest, it's October, and it's time to get rolling. Thanks, and have a great weekend.

Lou Baughman
Grain Merchandiser, Kenton (Region 1)

Another month comes to an end. Bean harvest will hopefully pick up later today and tomorrow. The weather is looking clear for the next ten days unless Hurricane Ian decides to take a crack at NW Ohio.  Beans taken off yesterday were still in the 14-15% range, but we have not received any today thus far.

The corn and beans were up twelve cents this morning, anticipating today’s USDA quarterly stocks report. After the report, corn and wheat are up, and beans are lower. The USDA report was friendly for corn and wheat, but beans were slightly bearish by increasing production due to anticipating higher harvested acres. 

Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)

Happy Harvest! After a wet start to the week, we are beginning to see inbounds pick up today, with weekend hours expected at some of our locations. Don’t forget to call your local elevator to get signed up for our text message alerts for harvest hours!
 
Hurricane Ian, high US dollar, start of harvest in our region, month-end, quarter-end, and a USDA Quarterly Stocks report. What more can we ask for this week?! The USDA Quarterly Stocks report shocked the markets this afternoon, with corn still up 14c this afternoon and beans down 34c currently. Sept 1 corn stocks came out to 1.377 bil bu (510 mil bu on-farm/867 mil bu off-farm), and although this is 12% higher than last September, it is 135 mil bu lower than the average estimate of 1.512 bil bu. Part of this reduction is due to US 2021 corn production being revised down 41.4 mil bu. As for beans, Sept 1 stocks were higher than anticipated, coming in at 274 mil bu (62.9 mil bu on-farm/211 mil bu off-farm) and USDA appeared to find more beans and increased US 2021 bean production by 30.2 mil bu. In conjunction with my comments from last week, it was also confirmed that Russia declared the annexation of four regions in Eastern Ukraine. Hope everyone has a safe weekend!

Lisa Warne
Grain Merchandiser, Mechanicsburg (Region 3)

Macroeconomic news and geopolitical news from the Black Sea were big factors in the direction of the market earlier this week. On days the US Dollar Index climbs, commodities struggle as it hinders export prospects. With continued uncertainties in Ukraine exports, cash wheat has gained over 50 cents this week, and spillover strength helped corn as well. Today’s corn gains come from a much smaller quarterly stocks figure than traders anticipated. Stocks came in at 1.377 billion bushels when trade expected 1.512 billion. Soybeans have suffered this week, and it continued today with a larger quarterly stocks number than expected. USDA pegged soybean stocks at 274 million bushels, over 30 million more than the average trade estimate of 242 million.
 
The market will await yield news now, but harvest is off to a slow beginning across the country. As of Sunday, US corn harvest sits at 12%, two points behind average. While soybeans are only at 8%, five points behind average. Here at Mechanicsburg, the cool damp mornings sure have thwarted progress, but late Thursday and this morning, soybeans across the scales have picked up. Be safe out there, and we’ll see you soon!
 

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Welcome to December! The commodity market continues to trade range bound, with corn trading roughly twenty cents lower on the week and beans unchanged.
Nov 18,2022
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.
Nov 11,2022
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.