Weekly Crop Commentary - 3/4/2022
Mar 04, 2022
Ed Nienaber
Vice President, Grain Division
The commodity markets are trading at historical levels for this time of year. Much will be said that it has to do with the ongoing conflict in Europe, and while this is very unsettling, it is only part of the current story. As we were made aware last week at the Southeastern Grain and Feed conference, the mainline railroads will continue to struggle with providing pre-pandemic service. Transportation in the grain industry will be an ongoing issue into the summer months as we attempt to work through the 2021-22 crop production. Currently, the basis has taken a sharp break mainly due to the massive amounts of bushels that have moved in the past two weeks. We are experiencing harvest basis pressure without the combines in the field. The supply/demand table hasn’t been adjusted as of today, so we are still looking at ample carry-over stock into the fall. However, we know that our exports numbers will be increasing on the next USDA report this coming Tuesday. The southern hemisphere issues have taken a back burner, but the situation remains the same, and they will be looking at reduced production this year. When you add it all up, folks just want to own grain today, so buying is a premium, and we have great demand. Now we must figure out how to get it to the end-user. Please understand we are doing the very best we can in a very challenging environment to provide you with the service you deserve from your cooperative.
Wes Bahan
Director of Grain Purchasing
Good afternoon. I am struggling to come up with the words to explain this week. Markets started a fury last week, but this week it went into a whole new realm. The amount of corn that was moving this week made it feel like it was the last week of October and not the first week of March. The events unfolding in the Black Sea Region have certainly sent panic into the grain markets, and rightfully so. That area supplies a lot of coarse grains to the world, and those voids need to be filled. With those voids needing to be filled cash corn basis crashed to end the week. The pipeline filled this week and had to incentivize someone to hold corn, and basis was the victim. The futures market is still steeply inverted, making a rebound in the basis a longer process. We are seeing similar actions in the bean market as cash basis has a weaker tone to end the week, but we did not see near the volume of beans as we did corn. The futures are also steeply inverted, but the pipeline isn’t overflowing like corn. Crushing margins both domestically and abroad are at very attractive levels, so we still have not found the price level that rations demand. What seemed to get the most attention was the wheat market. We have around 25% of the world’s wheat-producing area involved in the war, and that caused extreme uncertainty in the market. This should ensure that there isn’t much if any wheat that gets torn up and planted to something else this spring. The odd part is I end this week with more questions than when it started. We have not defined the corn or the wheat markets, we just simply seemed to run out of sellers of paper in Chicago. It feels like I have been all over the place here, and that is kind of common with the entire week here. I hope everyone has a great weekend it sounds like we will get our first taste of 70-degree weather, so go out and enjoy.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
Wow! What a historic week. A lot has changed in just over a week since Russia invaded Ukraine and Putin doesn’t appear to be backing down despite sanctions and worldwide unapproval of Russia’s intensifying war crimes. Today, Russia continues to make their way into the capital city of Kyiv and have also attacked and seized Europe’s largest nuclear power plant in southern Ukraine overnight. Markets have taken a slight breather Friday afternoon after an extremely volatile week as we made new highs in corn and wheat overnight. Crude oil has surpassed $100 a barrel and the US Dollar traded higher as well. President Biden did announce in his State of the Union Address this week that he was going to release 30 million barrels of oil from our national Strategic Petroleum Reserve to combat rising gas prices, so I’m curious to see how that will impact us at the pump here locally. The world wheat market has traded extended limits multiple days this week and there continues to be a concern with the black sea region’s ability to export wheat nearby and concern related to what will get planted and or harvested this year if this war is drawn out for months to come. To help manage our risk as a company, we have moved to bidding old crop corn and beans off the July futures and old crop wheat off the September futures as have most of our competitors in the industry. We are certainly in unprecedented times. Target offers remain a stable way to lock in opportunity in a fast-moving market. A reminder that we also have the March WASDE report coming up next week on 3/9, NOPA Crush on 3/15, and Prospective Plantings/Quarterly Stocks on 3/31. Hope you all have a safe weekend and please continue to pray for Ukraine and the uncertainty in this world we’re living in.
Vice President, Grain Division
The commodity markets are trading at historical levels for this time of year. Much will be said that it has to do with the ongoing conflict in Europe, and while this is very unsettling, it is only part of the current story. As we were made aware last week at the Southeastern Grain and Feed conference, the mainline railroads will continue to struggle with providing pre-pandemic service. Transportation in the grain industry will be an ongoing issue into the summer months as we attempt to work through the 2021-22 crop production. Currently, the basis has taken a sharp break mainly due to the massive amounts of bushels that have moved in the past two weeks. We are experiencing harvest basis pressure without the combines in the field. The supply/demand table hasn’t been adjusted as of today, so we are still looking at ample carry-over stock into the fall. However, we know that our exports numbers will be increasing on the next USDA report this coming Tuesday. The southern hemisphere issues have taken a back burner, but the situation remains the same, and they will be looking at reduced production this year. When you add it all up, folks just want to own grain today, so buying is a premium, and we have great demand. Now we must figure out how to get it to the end-user. Please understand we are doing the very best we can in a very challenging environment to provide you with the service you deserve from your cooperative.
Wes Bahan
Director of Grain Purchasing
Good afternoon. I am struggling to come up with the words to explain this week. Markets started a fury last week, but this week it went into a whole new realm. The amount of corn that was moving this week made it feel like it was the last week of October and not the first week of March. The events unfolding in the Black Sea Region have certainly sent panic into the grain markets, and rightfully so. That area supplies a lot of coarse grains to the world, and those voids need to be filled. With those voids needing to be filled cash corn basis crashed to end the week. The pipeline filled this week and had to incentivize someone to hold corn, and basis was the victim. The futures market is still steeply inverted, making a rebound in the basis a longer process. We are seeing similar actions in the bean market as cash basis has a weaker tone to end the week, but we did not see near the volume of beans as we did corn. The futures are also steeply inverted, but the pipeline isn’t overflowing like corn. Crushing margins both domestically and abroad are at very attractive levels, so we still have not found the price level that rations demand. What seemed to get the most attention was the wheat market. We have around 25% of the world’s wheat-producing area involved in the war, and that caused extreme uncertainty in the market. This should ensure that there isn’t much if any wheat that gets torn up and planted to something else this spring. The odd part is I end this week with more questions than when it started. We have not defined the corn or the wheat markets, we just simply seemed to run out of sellers of paper in Chicago. It feels like I have been all over the place here, and that is kind of common with the entire week here. I hope everyone has a great weekend it sounds like we will get our first taste of 70-degree weather, so go out and enjoy.
Haylee VanScoy
Grain Merchandiser, Upper Sandusky (Region 2)
Wow! What a historic week. A lot has changed in just over a week since Russia invaded Ukraine and Putin doesn’t appear to be backing down despite sanctions and worldwide unapproval of Russia’s intensifying war crimes. Today, Russia continues to make their way into the capital city of Kyiv and have also attacked and seized Europe’s largest nuclear power plant in southern Ukraine overnight. Markets have taken a slight breather Friday afternoon after an extremely volatile week as we made new highs in corn and wheat overnight. Crude oil has surpassed $100 a barrel and the US Dollar traded higher as well. President Biden did announce in his State of the Union Address this week that he was going to release 30 million barrels of oil from our national Strategic Petroleum Reserve to combat rising gas prices, so I’m curious to see how that will impact us at the pump here locally. The world wheat market has traded extended limits multiple days this week and there continues to be a concern with the black sea region’s ability to export wheat nearby and concern related to what will get planted and or harvested this year if this war is drawn out for months to come. To help manage our risk as a company, we have moved to bidding old crop corn and beans off the July futures and old crop wheat off the September futures as have most of our competitors in the industry. We are certainly in unprecedented times. Target offers remain a stable way to lock in opportunity in a fast-moving market. A reminder that we also have the March WASDE report coming up next week on 3/9, NOPA Crush on 3/15, and Prospective Plantings/Quarterly Stocks on 3/31. Hope you all have a safe weekend and please continue to pray for Ukraine and the uncertainty in this world we’re living in.