Weekly Crop Commentary - 10/21/2022
Oct 21, 2022
Ed Nienaber
Vice President, Grain Division
The grain markets have been trading on both sides of unchanged for most of the week. Since last week’s crop report and the bullish carry-over figures released by the USDA, we’ve not been able to sustain positive gains. Harvest continues to advance rapidly, especially out west, where basis levels have been extremely high for this time of year. Domestic markets are paying a premium to the export market for corn as harvest progresses in the Midwest. US corn is too expensive for export - we are down 50% from a year ago, forcing the buyer to look to South America and the Black Sea. Nonetheless, we are still seeing premiums continue to pay for nearby deliveries as ethanol demand and end feed users push to cover nearby needs domestically. The bean market, on the other hand, is seeing record crush margins. In addition, we currently are running 5% ahead of last year’s export pace. Futures markets continue to be supported by the overall feeling that China will soon be a major buyer of commodities as they deal with the ongoing pandemic. The industry, however, continues to struggle to meet the nearby demand due to the unbelievably low water levels on our river system. The USDA will release the next round of supply/demand figures Wednesday, November 9. This will be the last production update until the final figures are released in early January 2023.
Wes Bahan
Director of Grain Purchasing
Good Afternoon. Harvest has once again ramped up to end the week after a soggy couple of days. Cold temps have made their way in, and even a few snow flurries made their presence known. This week, the markets had their ups and downs, but seemed to end the week on a positive note. The cash markets have also found some stability. This is more a function of the lack of transportation in the marketplace than anything else. The Mississippi River continues to be at a level never seen before, and forecasts are not showing any signs of improvement. This is continually putting more pressure on the already unstable rail system, and one of their labor unions has, once again, rejected a presented contract. So, it appears we are not out of the woods yet on a potential railroad strike. In good news, yields continue to be impressive on both corn and beans. We are, however, seeing some vomitoxin issues in spots, so here we go again on that. It sounds like the weather this weekend is going to be fantastic, so everyone, have a great harvest weekend.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
What a beautiful weekend ahead of us! Soak up that sunshine and 75 degrees. Hope harvest has been going well for all of you. We are nearly 70% done with bean harvest and over a quarter of the way done with corn harvest. From conversations with growers, guys have been pleased with bean yields - many averaging in the 60s. Still haven’t heard a lot about corn yields, but most have been averaging about 190 or higher. With higher yields comes extra uncontracted bushels to market. Continue to stay in touch with your merchandisers and discuss marketing opportunities that benefit your operations. VOM continues to be a hot topic this fall. We are continually monitoring this at all our facilities. The majority of loads have been under 5 ppm, but we have seen some higher levels scattered in the mix. In terms of world news, uncertainty remains for the grain export corridor in Ukraine as fighting has intensified this week with Russia. Export sales boosted the bean market this week, with China purchases in the mix. Rains in the forecast for next week across the Midwest should bring some slight reprieve to Mississippi river levels, but it will be unlikely to change the current draft and tow restrictions. Hope you all have a safe weekend!
Lisa Warne
Grain Merchandiser, Marysville (Region 4)
Good afternoon! Corn receipts really picked up in the last week, especially after the miserably cold and wet weather on Tuesday and Wednesday. Customers seem quite pleased with the corn yields we are seeing so far, with a few reporting the best yields they’ve recorded. Here at the end of the week, customers are switching back to the soybean fields. It looks like we’ll have a few beautiful days ahead to hopefully wrap up most of the beans.
The market has seen a choppy trade this week. Corn has traded in an 18-cent window, while soybeans are in a 40-cent range. Wheat fluctuates with the Black Sea headlines trading a 45-cent span. Harvest pressure, the Dollar Index, and South American weather are all causing ebbs and flows in the market. Soybeans were buoyed on Thursday by a higher-than-expected export sales report, although the figure was lower than the same week last year. Exports on the Mississippi River remain backlogged, but one-way traffic did open back up near Hickman, KY. The US Coast Guard reported 943 barges and 74 vessels were waiting to move through. River levels near Memphis hit a record low of -10.79 feet versus normal, breaking the 1988 record. All this as the drought monitor shows dryness creeping east. Enjoy the warmer weather while you can, and have a great weekend!
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon! Harvest should get back into full swing this weekend and the first of next week here in NE Ohio. We didn’t have a lot of rain this week, but it was enough to take guys out of the fields for a couple of days.
The grain markets continue to chop sideways. The carryouts USDA released last week were by no means bearish, but with all the outside pressures - from high inflation, a strong dollar, to lack of investment money in the markets, and fears of a recession continue to hold pressure against the markets. The war in Ukraine has also made the markets move up and down on any given day. If Putin gets his way and closes the safe passage route in the Black Sea after the November agreement expires, that will again have a major impact on the markets.
I get asked the question every day, “where do you think things are going?” Never in my career has this been harder to answer. I do think the markets continue to stay supported because of the snug carryouts, but can we move higher? We can if some of the current pressures on the market change.
The river situation continues to be very challenging. We have had to lighten up the amount of grain we are loading on our barges by at least 10% with the ongoing low water issues on the lower Mississippi. There appears to be no end in sight until weather patterns change and we start to see some moisture in the forecast. Attached is a picture of what the Lower Mississippi looks like in many places. This is near Mound City, Illinois. You can see how low the river is. Many people may not know that at any point north of Cario, Illinois, on the Mississippi River and the Ohio River, they use the lock and dam system to maintain a certain depth so the barges can navigate the river without water levels getting too low. However, at points in the lower Mississippi south of Cario, there are no locks, so the river is free-flowing, and that is what caused a lot of the issues.
Stay safe as we get rolling again, and thanks to all of you for supporting us here at the co-op. We truly appreciate all the business that each of you gives us!
Vice President, Grain Division
The grain markets have been trading on both sides of unchanged for most of the week. Since last week’s crop report and the bullish carry-over figures released by the USDA, we’ve not been able to sustain positive gains. Harvest continues to advance rapidly, especially out west, where basis levels have been extremely high for this time of year. Domestic markets are paying a premium to the export market for corn as harvest progresses in the Midwest. US corn is too expensive for export - we are down 50% from a year ago, forcing the buyer to look to South America and the Black Sea. Nonetheless, we are still seeing premiums continue to pay for nearby deliveries as ethanol demand and end feed users push to cover nearby needs domestically. The bean market, on the other hand, is seeing record crush margins. In addition, we currently are running 5% ahead of last year’s export pace. Futures markets continue to be supported by the overall feeling that China will soon be a major buyer of commodities as they deal with the ongoing pandemic. The industry, however, continues to struggle to meet the nearby demand due to the unbelievably low water levels on our river system. The USDA will release the next round of supply/demand figures Wednesday, November 9. This will be the last production update until the final figures are released in early January 2023.
Wes Bahan
Director of Grain Purchasing
Good Afternoon. Harvest has once again ramped up to end the week after a soggy couple of days. Cold temps have made their way in, and even a few snow flurries made their presence known. This week, the markets had their ups and downs, but seemed to end the week on a positive note. The cash markets have also found some stability. This is more a function of the lack of transportation in the marketplace than anything else. The Mississippi River continues to be at a level never seen before, and forecasts are not showing any signs of improvement. This is continually putting more pressure on the already unstable rail system, and one of their labor unions has, once again, rejected a presented contract. So, it appears we are not out of the woods yet on a potential railroad strike. In good news, yields continue to be impressive on both corn and beans. We are, however, seeing some vomitoxin issues in spots, so here we go again on that. It sounds like the weather this weekend is going to be fantastic, so everyone, have a great harvest weekend.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
What a beautiful weekend ahead of us! Soak up that sunshine and 75 degrees. Hope harvest has been going well for all of you. We are nearly 70% done with bean harvest and over a quarter of the way done with corn harvest. From conversations with growers, guys have been pleased with bean yields - many averaging in the 60s. Still haven’t heard a lot about corn yields, but most have been averaging about 190 or higher. With higher yields comes extra uncontracted bushels to market. Continue to stay in touch with your merchandisers and discuss marketing opportunities that benefit your operations. VOM continues to be a hot topic this fall. We are continually monitoring this at all our facilities. The majority of loads have been under 5 ppm, but we have seen some higher levels scattered in the mix. In terms of world news, uncertainty remains for the grain export corridor in Ukraine as fighting has intensified this week with Russia. Export sales boosted the bean market this week, with China purchases in the mix. Rains in the forecast for next week across the Midwest should bring some slight reprieve to Mississippi river levels, but it will be unlikely to change the current draft and tow restrictions. Hope you all have a safe weekend!
Lisa Warne
Grain Merchandiser, Marysville (Region 4)
Good afternoon! Corn receipts really picked up in the last week, especially after the miserably cold and wet weather on Tuesday and Wednesday. Customers seem quite pleased with the corn yields we are seeing so far, with a few reporting the best yields they’ve recorded. Here at the end of the week, customers are switching back to the soybean fields. It looks like we’ll have a few beautiful days ahead to hopefully wrap up most of the beans.
The market has seen a choppy trade this week. Corn has traded in an 18-cent window, while soybeans are in a 40-cent range. Wheat fluctuates with the Black Sea headlines trading a 45-cent span. Harvest pressure, the Dollar Index, and South American weather are all causing ebbs and flows in the market. Soybeans were buoyed on Thursday by a higher-than-expected export sales report, although the figure was lower than the same week last year. Exports on the Mississippi River remain backlogged, but one-way traffic did open back up near Hickman, KY. The US Coast Guard reported 943 barges and 74 vessels were waiting to move through. River levels near Memphis hit a record low of -10.79 feet versus normal, breaking the 1988 record. All this as the drought monitor shows dryness creeping east. Enjoy the warmer weather while you can, and have a great weekend!
Ralph Wince
Grain Merchandiser, Canfield (Region 5)
Good afternoon! Harvest should get back into full swing this weekend and the first of next week here in NE Ohio. We didn’t have a lot of rain this week, but it was enough to take guys out of the fields for a couple of days.
The grain markets continue to chop sideways. The carryouts USDA released last week were by no means bearish, but with all the outside pressures - from high inflation, a strong dollar, to lack of investment money in the markets, and fears of a recession continue to hold pressure against the markets. The war in Ukraine has also made the markets move up and down on any given day. If Putin gets his way and closes the safe passage route in the Black Sea after the November agreement expires, that will again have a major impact on the markets.
I get asked the question every day, “where do you think things are going?” Never in my career has this been harder to answer. I do think the markets continue to stay supported because of the snug carryouts, but can we move higher? We can if some of the current pressures on the market change.
The river situation continues to be very challenging. We have had to lighten up the amount of grain we are loading on our barges by at least 10% with the ongoing low water issues on the lower Mississippi. There appears to be no end in sight until weather patterns change and we start to see some moisture in the forecast. Attached is a picture of what the Lower Mississippi looks like in many places. This is near Mound City, Illinois. You can see how low the river is. Many people may not know that at any point north of Cario, Illinois, on the Mississippi River and the Ohio River, they use the lock and dam system to maintain a certain depth so the barges can navigate the river without water levels getting too low. However, at points in the lower Mississippi south of Cario, there are no locks, so the river is free-flowing, and that is what caused a lot of the issues.
Stay safe as we get rolling again, and thanks to all of you for supporting us here at the co-op. We truly appreciate all the business that each of you gives us!