Weekly Crop Commentary - 2/3/2023
Feb 03, 2023
Ed Nienaber
Vice President, Grain Division
This week has been somewhat of a quiet week in the commodity market with corn trading five cents lower and beans up twenty cents. Country movement has been minimal as farmers clean up forward contracts and wait on cash price improvement. Much of the attention has been Southern Hemisphere weather, continued dryness in Argentina and wetter than normal harvest conditions in Brazil. This has brought China back to the US this week for export bean shipments in the near term. The funds continue to trade on weather issues in the Southern Hemisphere and Chinese business. However, this market is being thinly traded as volume is very light, thus the big swings in the bean market. Basis has been steady on corn as end users continue to buy as needed. Soybean basis in Ohio is being pressured by increased stocks from a year ago and lack of export competition. We are seeing some of the best crush margins for beans in years, but local crushers are currently covered up nearby. We will have an update on supply/demand numbers Wednesday, February 8 at noon. Ag Outlook Forum later in the month will give us the government’s first look at anticipated acreage on corn/bean ratio this year. It appears after this weekend that things will be warming up as the Midwest is calling for warmer than normal temperatures for the first half of February. Have a great week and please continue to be safe.
Wes Bahan
Vice President, Grain Division
In yesterday’s export sales report, we sold 67.2 mbu of corn last week. That came in well above expectations and 75% above last week’s report. However, we are still lacking the pace needed to reach the current USDA estimate by 13%. The reports showed that we sold 27 mbu of soybeans last week. This hit the bottom edge of the trade expectation, but I’m not sure we need to meet trade expectations. This takes us to 87% of our estimation for the year and we still have well over half the marketing year to go. Rains in Brazil are slowing the harvest and the wait times are in the neighborhood of 45 days. This is pushing anyone that needs immediate shipment back to us and increasing barge freight again. Demand in the export market will continue to keep the markets inverted, which should be making the processors very nervous on how they will source beans into the summer months. We saw a report from the USDA this morning on a sale of 4.8 mbu of new crop bean sales to unknown destinations. We will get a look at the monthly supply and demand numbers from the USDA next Wednesday, and it will be interesting to see if they make some adjustments due to the weather in South America. The wheat market is continuing the struggle this week. Exports continue to be poor and the prospects of a large crop due to the acreage increase looks to be very good in the Soft Red Wheat growing region. Have a great weekend.
Haylee VanScoy
Director of Grain Purchasing
It sure felt like Punxsutawney Phil was keeping true to his prediction of 6 more weeks of winter this morning, waking up to frigid temps. The sunrise sure was worth it at least! Looks like the cold snap will be short lived however with temps getting back up into the low 60s next week. Got to love this time of the year! This week, I had the pleasure of attending the Ohio Agribusiness Association industry conference in Columbus. Some of the top conversations revolved around low stocks-to-use ratios in the US, increasing domestic soybean demand with the help of renewable diesel, national food security, and geopolitical uncertainty. I won’t get in to any conspiracy theories, but there were definitely some thought-provoking conversations and ideas discussed. Tight US balance sheets have surely contributed to why we are where we are with prices. In terms of domestic soybean crush, we could see increases from 2.2 to 2.8 bil bu by 2025 with renewable diesel demand doubling by that time. Currently, most of the investments for renewable diesel are being made along the coast, but it’ll be interesting to see how the US responds to a potential shift in lower global soybean exports and increased government incentives to invest in a greener footprint. The Fed also had their first meeting of 2023 and delivered a 25 basis point rate hike. This is a slowdown compared to the 50 and 75 point rate hikes that we saw in 2022, but I expect that we will continue to see the Fed turn up the heat ever so slightly this year to further tighten monetary policy. Continuing to keep an eye on the hot and dry 10-day forecast in Argentina and slow starts to harvest in Brazil. Next Wednesday is also the release of the February WASDE reports, so we’ll see what the USDA has to say about South American production and US corn and bean carryout. Hope you all have a great weekend and stay warm out there!
Lou Baughman
Grain Merchandiser, Kenton (Region 1)
Markets are stuck in a trading rage this week. We are still watching South America’s weather closely. Because of Brazil’s continued harvest delays, the US export window has been extended. The export report showed good numbers for corn, but wheat and beans were lacking. Choppy trade again today and it looks like this will continue as the market has a wait and see feel, with the S&D report coming out next Wednesday, will there be any surprise? Have a good weekend.
Will Gase
Grain Merchandiser, Upper Sandusky (Region 2)
Happy February everyone. Markets this week are mixed compared to ending price last Friday. Beans made a rally this week getting above $15.00 cash for old crop in Upper Sandusky.
The bean markets are continuing to fluctuate daily depending on the weather forecast in Argentina and Brazil. The USDA dropped Argentina’s production levels by 3.2 million tons. Even with this drop in production for Argentina, Brazil has more than enough to combat Argentina’s shortage. I ran a quick report to see the U.S.A. production in beans compared to Argentina and Brazil for the last three years. On average, Brazil and Argentina’s production is around 183 mmt. This year they are projecting over 193 with a drought-stricken bean crop in Argentina. The U.S.A on average has a production of 117 mmt, and this year came in at 116 for those wondering. Pending similar harvest numbers, we could see a higher supply which could potentially turn the market down.
Now is also the time of year to start thinking about the DP you have on storage. Throw out some target orders or think about rolling the DP to a contract to cut back on the storage costs. As always give us a call and we’d be happy to help. Hope everyone has a great weekend!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
Lisa Warne
Grain Merchandiser, Marysville (Region 4)
Welcome to February, the spring price discovery month for crop insurance. The markets have been mixed this week, but soybeans, wheat, and new corn look to be higher than we were a week ago. Old corn is simply struggling. Export sales reported on Thursday were better than anticipated for corn, but the market shrugged it off since we are so far behind the pace needed to meet the USDA’s projections. China bought 12.6 million bushels of corn last week though, which was their largest weekly corn purchase since last May. We need to see this continue to catch up on the lagging sales of late.
Soybeans are buoyed by continued dryness and heat in Argentina and a slow start to harvest in Brazil. The delay in Brazil widens our window of sales opportunities, but private forecasters are continuing to increase their record production estimates. StoneX Brazil increased their soybean forecast from 153.8 to 154.2 MMT, compared to last year’s 127.2 MMT.
About five weeks ago, cash wheat for July delivery hit 7.58 before it started the downhill slide. In the last two weeks, it has been slowly creeping its way back up. If levels at 7.50+ work for your wheat marketing plan, it might be time to get target offers in place. Have a great weekend!
Vice President, Grain Division
This week has been somewhat of a quiet week in the commodity market with corn trading five cents lower and beans up twenty cents. Country movement has been minimal as farmers clean up forward contracts and wait on cash price improvement. Much of the attention has been Southern Hemisphere weather, continued dryness in Argentina and wetter than normal harvest conditions in Brazil. This has brought China back to the US this week for export bean shipments in the near term. The funds continue to trade on weather issues in the Southern Hemisphere and Chinese business. However, this market is being thinly traded as volume is very light, thus the big swings in the bean market. Basis has been steady on corn as end users continue to buy as needed. Soybean basis in Ohio is being pressured by increased stocks from a year ago and lack of export competition. We are seeing some of the best crush margins for beans in years, but local crushers are currently covered up nearby. We will have an update on supply/demand numbers Wednesday, February 8 at noon. Ag Outlook Forum later in the month will give us the government’s first look at anticipated acreage on corn/bean ratio this year. It appears after this weekend that things will be warming up as the Midwest is calling for warmer than normal temperatures for the first half of February. Have a great week and please continue to be safe.
Wes Bahan
Vice President, Grain Division
In yesterday’s export sales report, we sold 67.2 mbu of corn last week. That came in well above expectations and 75% above last week’s report. However, we are still lacking the pace needed to reach the current USDA estimate by 13%. The reports showed that we sold 27 mbu of soybeans last week. This hit the bottom edge of the trade expectation, but I’m not sure we need to meet trade expectations. This takes us to 87% of our estimation for the year and we still have well over half the marketing year to go. Rains in Brazil are slowing the harvest and the wait times are in the neighborhood of 45 days. This is pushing anyone that needs immediate shipment back to us and increasing barge freight again. Demand in the export market will continue to keep the markets inverted, which should be making the processors very nervous on how they will source beans into the summer months. We saw a report from the USDA this morning on a sale of 4.8 mbu of new crop bean sales to unknown destinations. We will get a look at the monthly supply and demand numbers from the USDA next Wednesday, and it will be interesting to see if they make some adjustments due to the weather in South America. The wheat market is continuing the struggle this week. Exports continue to be poor and the prospects of a large crop due to the acreage increase looks to be very good in the Soft Red Wheat growing region. Have a great weekend.
Haylee VanScoy
Director of Grain Purchasing
It sure felt like Punxsutawney Phil was keeping true to his prediction of 6 more weeks of winter this morning, waking up to frigid temps. The sunrise sure was worth it at least! Looks like the cold snap will be short lived however with temps getting back up into the low 60s next week. Got to love this time of the year! This week, I had the pleasure of attending the Ohio Agribusiness Association industry conference in Columbus. Some of the top conversations revolved around low stocks-to-use ratios in the US, increasing domestic soybean demand with the help of renewable diesel, national food security, and geopolitical uncertainty. I won’t get in to any conspiracy theories, but there were definitely some thought-provoking conversations and ideas discussed. Tight US balance sheets have surely contributed to why we are where we are with prices. In terms of domestic soybean crush, we could see increases from 2.2 to 2.8 bil bu by 2025 with renewable diesel demand doubling by that time. Currently, most of the investments for renewable diesel are being made along the coast, but it’ll be interesting to see how the US responds to a potential shift in lower global soybean exports and increased government incentives to invest in a greener footprint. The Fed also had their first meeting of 2023 and delivered a 25 basis point rate hike. This is a slowdown compared to the 50 and 75 point rate hikes that we saw in 2022, but I expect that we will continue to see the Fed turn up the heat ever so slightly this year to further tighten monetary policy. Continuing to keep an eye on the hot and dry 10-day forecast in Argentina and slow starts to harvest in Brazil. Next Wednesday is also the release of the February WASDE reports, so we’ll see what the USDA has to say about South American production and US corn and bean carryout. Hope you all have a great weekend and stay warm out there!
Lou Baughman
Grain Merchandiser, Kenton (Region 1)
Markets are stuck in a trading rage this week. We are still watching South America’s weather closely. Because of Brazil’s continued harvest delays, the US export window has been extended. The export report showed good numbers for corn, but wheat and beans were lacking. Choppy trade again today and it looks like this will continue as the market has a wait and see feel, with the S&D report coming out next Wednesday, will there be any surprise? Have a good weekend.
Will Gase
Grain Merchandiser, Upper Sandusky (Region 2)
Happy February everyone. Markets this week are mixed compared to ending price last Friday. Beans made a rally this week getting above $15.00 cash for old crop in Upper Sandusky.
The bean markets are continuing to fluctuate daily depending on the weather forecast in Argentina and Brazil. The USDA dropped Argentina’s production levels by 3.2 million tons. Even with this drop in production for Argentina, Brazil has more than enough to combat Argentina’s shortage. I ran a quick report to see the U.S.A. production in beans compared to Argentina and Brazil for the last three years. On average, Brazil and Argentina’s production is around 183 mmt. This year they are projecting over 193 with a drought-stricken bean crop in Argentina. The U.S.A on average has a production of 117 mmt, and this year came in at 116 for those wondering. Pending similar harvest numbers, we could see a higher supply which could potentially turn the market down.
Now is also the time of year to start thinking about the DP you have on storage. Throw out some target orders or think about rolling the DP to a contract to cut back on the storage costs. As always give us a call and we’d be happy to help. Hope everyone has a great weekend!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
It is still winter as we are having a cold snap but looking to next week, I see 50s in the forecast. We have seen good rain in the last month or so to help recharge the water tables in this area. I have seen some standing water in area so that is a good thing as we were dry last fall and needed to add some moisture to help us for this year.
Corn and soybean futures are still range bound as we work our way to spring. There is not much news out here today to make the markets work higher. Brazil harvest has been slowed by rains which is helping support the nearby cash soybean market. They have a record crop coming to the market and it will get there sometime. The bigger thing is the harvest delays will slow the planting of their safrina corn crop which could hurt production as it pushes it into the dryer season.
I am still a seller of old corn and soybean as we see these little bumps. You need to look at the futures and nearby futures which are higher than we are for anytime the rest of the year. We will need to see a big basis improvement from where we are today to make it worth the time and money to carry this crop to summer. You had a very good crop last year, why not take some profit on it and put that money towards paying down operating loans or put it to work where you can get a return.
February is the time we set our first round of insurance values. Today, we are looking at 5.95 December corn futures and 13.70 November soybean futures. We will have to see how the rest of the month progresses to see what your guarantees will be. Last year we ended up at 5.90 and 14.33.Lisa Warne
Grain Merchandiser, Marysville (Region 4)
Welcome to February, the spring price discovery month for crop insurance. The markets have been mixed this week, but soybeans, wheat, and new corn look to be higher than we were a week ago. Old corn is simply struggling. Export sales reported on Thursday were better than anticipated for corn, but the market shrugged it off since we are so far behind the pace needed to meet the USDA’s projections. China bought 12.6 million bushels of corn last week though, which was their largest weekly corn purchase since last May. We need to see this continue to catch up on the lagging sales of late.
Soybeans are buoyed by continued dryness and heat in Argentina and a slow start to harvest in Brazil. The delay in Brazil widens our window of sales opportunities, but private forecasters are continuing to increase their record production estimates. StoneX Brazil increased their soybean forecast from 153.8 to 154.2 MMT, compared to last year’s 127.2 MMT.
About five weeks ago, cash wheat for July delivery hit 7.58 before it started the downhill slide. In the last two weeks, it has been slowly creeping its way back up. If levels at 7.50+ work for your wheat marketing plan, it might be time to get target offers in place. Have a great weekend!