Weekly Crop Commentary - 3/17/2023
Mar 17, 2023
Ed Nienaber
Vice President, Grain Division
Happy St. Patrick’s Day! We are putting the final touches on an interesting week in the commodity markets. We find corn trading twenty cents stronger and beans doing the opposite at twenty lower for the week. The strength in corn has solely to do with the 2.1 million tons/80 million bushels of export corn traded this week with China. Many in the trade are feeling like this is just the beginning of Chinese interest in US corn. Bank failures here and abroad this week have but pressure on most if not all commodity markets. Trade continues to monitor ongoing concerns in the Black Sea region and the ongoing conflict between Russia and Ukraine. The old crop corn and bean futures continue to widen the inverse, sending signals to the marketplace that the time to move grain is now. The nearby basis will continue to trade steady at best under the current conditions. However, if China must continue to come to the US for corn this summer things could get very interesting. Planting intentions will be released along with grain stock in two weeks. Please continue to be safe and “Luck of the Irish” as well.
Wes Bahan
Vice President, Grain Division
Good afternoon. It has been a couple of weeks since my last contribution. The corn market finally got the news it has been waiting on, a big purchase from China. There were four different announcements by the USDA this week confirming the purchase of 2.1 MMT or 83.1 million bushels of corn bought by China to ship this marketing year. There have been rumors of something like this floating around for a couple of weeks, and I guess the corn market finally got cheap enough to make the announcements. Along with that this week, we have seen the futures markets recover some 30 cents off the recent decline and bids for cash improving. The exporters now need to extend coverage and the recent set back has dried up all producer selling. The strength in the cash market is starting to spill into the rail markets, causing them to stabilize. Brazil continues to be the cheapest game around for soybeans, and we have watched the futures market this week give up close to 50 cents. If we see a shining star, it’s that wait times at Brazilian ports continue to be rather lengthy, and any spot business will likely come to us due to timely loading. We have done a bit of business as we are starting to see some bids for beans in the cash market appear again. We have the planting intentions and quarterly grain stocks reports that will release at the end of the month, and they are usually market moving reports. Thanks, and have a great weekend.
Haylee VanScoy
Director of Grain Purchasing
Grai
Good afternoon on this rainy St. Patrick’s Day! This weather reminds me of being back in Ireland. Grain markets started the week rough with concerns from the SVB bank collapse. The Fed and FDIC backstopped depositors to prevent further damage in the banking sector. The US is still seeing high inflation with Wednesday’s CPI up 0.6% month-on-month. Likely that we will continue to see the Feds raise interest rates next week, but the trade is looking at only a 25-point basis hike compared to 50-75 basis points in the past. It has been alluded to that we may have to see interest rates rise higher than CPI for us to get a handle on inflation and if that’s the case, we still have around a 170-basis point discrepancy to account for yet. As for the Ukrainian grain corridor agreement, Russia is in support of a 60-day extension rather than the 120-day extension that was proposed by the UN, but nothing is signed yet, so we’ll see where that finishes out. Private estimates continue to reduce the size of Argentine corn and beans with cuts 30% lower from original expectations on corn and almost 50% lower on bean production and good-to-excellent ratings below 5%. The corn market has found support with China coming in to buy 612,000 MT on Tuesday, 667,000 MT on Wednesday, 641,000 MT on Thursday, and an additional 191,000 MT this morning of US corn, but unfortunately, I think we will continue to stay range bound for the next two weeks until the March 31 planting intentions report. Thank you to those of you who attended the Upper Sandusky grain market outlook meeting this past Monday. It was a pleasure to catch up with many of my old customers! The last Heritage grain marketing meeting will be March 28th in Plain City. Hope you all have a safe St. Patty’s Day weekend!
Will Gase
Grain Merchandiser, Upper Sandusky (Region 2)
Happy Friday, everyone! Today seems like typical March, just blah. Since last Friday corn is up nearly 20 cents, beans are down 30 cents, and wheat is up nearly 20 cents. Corn exports this week were up with multiple sales to China. This caused a rally in the market after news of the Silicon Valley bank closing towards the end of last week and the beginning of this week. We have had four days in a row of flash sales to China with three days above 600,000 tons. These sales will put us closer to on target with the USDA estimates for next week’s export sales report. Ultimately this has been a pretty good rebound in prices for cash corn. If you still have some in the bin or unpriced it might be time to start thinking about pricing options as I am not sure how much higher we will get.
When looking at new crop prices I think it is smart to think of your profitability and being able to lock in prices at a profitable level. There is always a chance that we see north of $7.00 corn and $15.00 beans, but at the same time there is always a chance we drop to $4.00 corn and $10.00 beans. Just some food for thought. On a local level I hope everyone that attended Monday’s grain outlook meeting had a good night of fellowship and learning. It was nice seeing everyone. Hope everyone has a great St. Patrick’s Day!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
It is a rainy Friday. The one good thing is it is March Madness, so if you are stuck inside at least you have basketball to watch. A couple of upsets have taken place already and I am sure there are more to follow.
Grain Merchandiser, Marysville (Region 4)
Happy St Patrick’s Day! Cheers to those having some Jameson or Guinness later today. Old corn recovered over 15 cents of last week’s losses. The support came from a 4-day run of export sales announcements of corn to China, totaling over 83 million bushels. For a rally to continue, we’ll need China to keep making purchases. However, indications are showing that African Swine Fever is surging again there. Data is difficult to verify but some surveys indicate breeding sow numbers are reduced 20-30%. Reduced hog populations will stifle both corn and soybean demand from China.
Unlike corn, soybeans continued their decline, looking to close 30-some cents lower on the week. The global economic and financial instability has caused volatility in the markets, with all commodities seeing selloffs. The continuous crude oil chart is the lowest in almost two years with it breaking below $66 a barrel this week. In Argentina, the Buenos Aires Exchange again cut production estimates for their corn to 36 MMT and soybeans to 25 MMT, the lowest since 1999/2000. This is in comparison to USDA’s figures from last week of 40 MMT corn and 33 MMT beans. Again, Brazil’s record crop will offset some of that damage, but it will all need calculated into the global supply. Next Tuesday is National Ag Day. Thank you for your crucial part in this essential industry. Have a great weekend!
Vice President, Grain Division
Happy St. Patrick’s Day! We are putting the final touches on an interesting week in the commodity markets. We find corn trading twenty cents stronger and beans doing the opposite at twenty lower for the week. The strength in corn has solely to do with the 2.1 million tons/80 million bushels of export corn traded this week with China. Many in the trade are feeling like this is just the beginning of Chinese interest in US corn. Bank failures here and abroad this week have but pressure on most if not all commodity markets. Trade continues to monitor ongoing concerns in the Black Sea region and the ongoing conflict between Russia and Ukraine. The old crop corn and bean futures continue to widen the inverse, sending signals to the marketplace that the time to move grain is now. The nearby basis will continue to trade steady at best under the current conditions. However, if China must continue to come to the US for corn this summer things could get very interesting. Planting intentions will be released along with grain stock in two weeks. Please continue to be safe and “Luck of the Irish” as well.
Wes Bahan
Vice President, Grain Division
Good afternoon. It has been a couple of weeks since my last contribution. The corn market finally got the news it has been waiting on, a big purchase from China. There were four different announcements by the USDA this week confirming the purchase of 2.1 MMT or 83.1 million bushels of corn bought by China to ship this marketing year. There have been rumors of something like this floating around for a couple of weeks, and I guess the corn market finally got cheap enough to make the announcements. Along with that this week, we have seen the futures markets recover some 30 cents off the recent decline and bids for cash improving. The exporters now need to extend coverage and the recent set back has dried up all producer selling. The strength in the cash market is starting to spill into the rail markets, causing them to stabilize. Brazil continues to be the cheapest game around for soybeans, and we have watched the futures market this week give up close to 50 cents. If we see a shining star, it’s that wait times at Brazilian ports continue to be rather lengthy, and any spot business will likely come to us due to timely loading. We have done a bit of business as we are starting to see some bids for beans in the cash market appear again. We have the planting intentions and quarterly grain stocks reports that will release at the end of the month, and they are usually market moving reports. Thanks, and have a great weekend.
Haylee VanScoy
Director of Grain Purchasing
Grai
Good afternoon on this rainy St. Patrick’s Day! This weather reminds me of being back in Ireland. Grain markets started the week rough with concerns from the SVB bank collapse. The Fed and FDIC backstopped depositors to prevent further damage in the banking sector. The US is still seeing high inflation with Wednesday’s CPI up 0.6% month-on-month. Likely that we will continue to see the Feds raise interest rates next week, but the trade is looking at only a 25-point basis hike compared to 50-75 basis points in the past. It has been alluded to that we may have to see interest rates rise higher than CPI for us to get a handle on inflation and if that’s the case, we still have around a 170-basis point discrepancy to account for yet. As for the Ukrainian grain corridor agreement, Russia is in support of a 60-day extension rather than the 120-day extension that was proposed by the UN, but nothing is signed yet, so we’ll see where that finishes out. Private estimates continue to reduce the size of Argentine corn and beans with cuts 30% lower from original expectations on corn and almost 50% lower on bean production and good-to-excellent ratings below 5%. The corn market has found support with China coming in to buy 612,000 MT on Tuesday, 667,000 MT on Wednesday, 641,000 MT on Thursday, and an additional 191,000 MT this morning of US corn, but unfortunately, I think we will continue to stay range bound for the next two weeks until the March 31 planting intentions report. Thank you to those of you who attended the Upper Sandusky grain market outlook meeting this past Monday. It was a pleasure to catch up with many of my old customers! The last Heritage grain marketing meeting will be March 28th in Plain City. Hope you all have a safe St. Patty’s Day weekend!
Will Gase
Grain Merchandiser, Upper Sandusky (Region 2)
Happy Friday, everyone! Today seems like typical March, just blah. Since last Friday corn is up nearly 20 cents, beans are down 30 cents, and wheat is up nearly 20 cents. Corn exports this week were up with multiple sales to China. This caused a rally in the market after news of the Silicon Valley bank closing towards the end of last week and the beginning of this week. We have had four days in a row of flash sales to China with three days above 600,000 tons. These sales will put us closer to on target with the USDA estimates for next week’s export sales report. Ultimately this has been a pretty good rebound in prices for cash corn. If you still have some in the bin or unpriced it might be time to start thinking about pricing options as I am not sure how much higher we will get.
When looking at new crop prices I think it is smart to think of your profitability and being able to lock in prices at a profitable level. There is always a chance that we see north of $7.00 corn and $15.00 beans, but at the same time there is always a chance we drop to $4.00 corn and $10.00 beans. Just some food for thought. On a local level I hope everyone that attended Monday’s grain outlook meeting had a good night of fellowship and learning. It was nice seeing everyone. Hope everyone has a great St. Patrick’s Day!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
It is a rainy Friday. The one good thing is it is March Madness, so if you are stuck inside at least you have basketball to watch. A couple of upsets have taken place already and I am sure there are more to follow.
Corn has rebounded this week after getting beat up the last few weeks. China has finally come to the market to buy corn which has lent support to the market. We will have to see if they continue to purchase corn and if it ships. We have not seen much basis movement in the area as the end users seem to have plenty of corn to meet their needs today. If the weather cooperates, we will see planting in the next 30 days, so we have that to look forward to.
Soybeans have not found the support that corn has this week, but they have not fallen off like the corn market has. South America is filling the world market need of soybeans today and will for the next several months. The financial markets have not helped us this week with all the turmoil in the banking sector. If bankers would act like bankers and not hedge fund managers, we would not have these issues.
We will have to wait and see if the market continues to find a reason to go higher and when or if it does can the farmer pull the trigger and sell?
Grain Merchandiser, Marysville (Region 4)
Happy St Patrick’s Day! Cheers to those having some Jameson or Guinness later today. Old corn recovered over 15 cents of last week’s losses. The support came from a 4-day run of export sales announcements of corn to China, totaling over 83 million bushels. For a rally to continue, we’ll need China to keep making purchases. However, indications are showing that African Swine Fever is surging again there. Data is difficult to verify but some surveys indicate breeding sow numbers are reduced 20-30%. Reduced hog populations will stifle both corn and soybean demand from China.
Unlike corn, soybeans continued their decline, looking to close 30-some cents lower on the week. The global economic and financial instability has caused volatility in the markets, with all commodities seeing selloffs. The continuous crude oil chart is the lowest in almost two years with it breaking below $66 a barrel this week. In Argentina, the Buenos Aires Exchange again cut production estimates for their corn to 36 MMT and soybeans to 25 MMT, the lowest since 1999/2000. This is in comparison to USDA’s figures from last week of 40 MMT corn and 33 MMT beans. Again, Brazil’s record crop will offset some of that damage, but it will all need calculated into the global supply. Next Tuesday is National Ag Day. Thank you for your crucial part in this essential industry. Have a great weekend!