Weekly Crop Commentary - 7/21/2022
Jul 21, 2023
Ed Nienaber
Vice President, Grain Division
This week has brought double digit moves in both directions in the futures markets. Improved crop condition ratings on both corn and soybeans, and a somewhat bearish crop report last week. You would have been looking for steady to lower. However, the forecast for hotter than normal and lack of significant rainfall caused heavy buying.
The fund buying and setting off “algorithm” trading pushed markets significantly higher. Money flow has settled down and we are currently trading corn and beans up about 25¢ on the week. In addition, we did see buying equated to the escalation of the ongoing conflict in Ukraine. We did see farmers selling pick-up this week, taking advantage of the positive market move. Old crop cash basis continues to hold steady to firm, as ethanol, feed and crush margins are keeping domestic buyers engaged. However, the new crop basis is a concern with the potential corn production estimate and reduction in soybean exports. China’s lack of participation for fall U.S. coverage and southern hemisphere increase of bean planted acreage will be key to harvest basis levels.
Have a great week and enjoy this weekend weather.
Lou Baughman
Grain Merchandiser, Kenton (Region 1)
The weather forecast for the western corn belt is heating up with dryness, but looking further into August, a cooldown is showing up. Locally, precipitation reported from last night was anywhere from .8 – .2 and I didn’t hear of any hail like they were forecasting.
News headlines will continue to make the markets extremely volatile. The first of the week was a big run up only to end the week backing off with the funds taking profits. Get with your local elevator to contract new crop grain. If you have not contracted anything I feel these levels are a good place to start and put targets into place so not to miss out on the rallies.
Will Gase
Grain Merchandiser, Upper Sandusky (Region 2)
Good afternoon and happy Friday, hard to believe July is almost over! Thanks to the Russia-Ukraine conflict oversees, we saw prices take a jump up this week. We made sizeable jumps in all three commodities. Russia has been bombing Ukrainian Export Facility and food processing plants for four straight days. They have two main objections in this. First is to make it extremely difficult for these export facilities to get grain out of the silos and into the ships, and second is to instill a fear factor into shipping and insurance companies on trying to travel through the black sea. Instilling fear into the market always brings volatility so keep a close eye on what is happening overseas.
Wheat harvest is all but done here in the north region. Quality seems to be good to excellent and yields were way above expectations. For those that planted double crop beans it looks like they are breaking through the ground and sprouting up. With how volatile the wheat market is, it would be a great idea to set target orders on the wheat that is on DP still to try and maximize your bushels.
Beans and Corn also made jumps this week and while corn is barely hanging on to 5.00 cash, it is always a great idea to minimize risk going into harvest and get some bushels locked in. As always give us a call to get bushels contracted or on target orders. Have a great weekend everyone!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
I just looked at the calendar and we only have a week left in July. Where did this month go? I have been out on my motorcycle around a lot of the area, and crop for the most part looks very good, other than they are a couple weeks behind what I would see as normal. I have a customer who also is a vegetable farmer on a large scale, they just started harvesting sweet corn this week which is as late as they ever have, and 10 to 14 days later than normal. This crop has been slow developing and is just progressing along slowly. We did pick up some rain in my area last evening which will be beneficial.
The roller coaster continues in the grain markets this week. The corn market traded to its highest level since the June 30 crop report. We had new crop cash corn back over 5.00 for a day or so. I am still in the camp that it is going too hard to push corn prices higher. The crop may not be trend line but it is still going to be enough to push carryout to over 2.0 billion bushel. If this does materialize we are going to see cash corn prices this winter in the $4 – $5 range.
Soybeans rallied this week and the farmer was able to sell harvest beans at 13.75 or better, that is the highest price you have been able to sell soybeans for harvest this year. The soybean story is a little different than corn as the reduced acres makes carryout a bit tighter so any kind of yield reduction gives us a story. The problem with soybeans is that Brazil is still shipping last year’s crop and will continue to ship well into the fall. We will have to see how many acres the South American farmer plants and what their weather does down there over our late fall and winter. Stay tuned.
I am not going to rehash the Russia-Ukraine war. It matters to the markets as the world needs the grain from that region but we don’t know from day to day what Putin is going to do. We will have to see how long the Russian people will continue to put up with the war and support him.
Keep an eye on your crops progress and if we need to get more sales on before harvest give us a call.
Lisa Warne
Grain Merchandiser, Marysville (Region 4)
Good afternoon! War and weather – those are the two keywords of the week. Tuesday and Wednesday’s rallies were spurred by Ukraine attacking the bridge that connects Crimea and Russia, causing Russia to back out of their Grain Deal which allowed export shipments to flow. Since then, Russia has announced they would treat ships in the Black Sea area as military vessels. Russia has attacked Ukraine ports and grain infrastructure four nights in a row. While there is still plenty of global wheat supply, all this new tension brings fear and uncertainty into the grain markets. Wheat is up around 40¢ since last Friday’s close. If you’re one to plant wheat every fall, these turbulent moments in the Black Sea might be a good time to look at July ’24 cash bids while they’re around $7.
Carryover strength from the wheat volatility along with hot and dry weather in the Central Corn Belt has rallied corn more than 25¢ and soybeans around 30¢ this week. While the 7-day forecast remains dry, there is a chance of rain in the “I” states at the tail end of the month. We’re hearing chatter that things west of here are dry, but not disastrous. We won’t be seeing record yields, but perhaps still a decent year. With 94 million acres of corn, that’s a big crop and $5+ straight out of the field may be a good deal. Have a great weekend and good luck to all the exhibitor families at the Union County Fair next week!
Vice President, Grain Division
This week has brought double digit moves in both directions in the futures markets. Improved crop condition ratings on both corn and soybeans, and a somewhat bearish crop report last week. You would have been looking for steady to lower. However, the forecast for hotter than normal and lack of significant rainfall caused heavy buying.
The fund buying and setting off “algorithm” trading pushed markets significantly higher. Money flow has settled down and we are currently trading corn and beans up about 25¢ on the week. In addition, we did see buying equated to the escalation of the ongoing conflict in Ukraine. We did see farmers selling pick-up this week, taking advantage of the positive market move. Old crop cash basis continues to hold steady to firm, as ethanol, feed and crush margins are keeping domestic buyers engaged. However, the new crop basis is a concern with the potential corn production estimate and reduction in soybean exports. China’s lack of participation for fall U.S. coverage and southern hemisphere increase of bean planted acreage will be key to harvest basis levels.
Have a great week and enjoy this weekend weather.
Lou Baughman
Grain Merchandiser, Kenton (Region 1)
The weather forecast for the western corn belt is heating up with dryness, but looking further into August, a cooldown is showing up. Locally, precipitation reported from last night was anywhere from .8 – .2 and I didn’t hear of any hail like they were forecasting.
News headlines will continue to make the markets extremely volatile. The first of the week was a big run up only to end the week backing off with the funds taking profits. Get with your local elevator to contract new crop grain. If you have not contracted anything I feel these levels are a good place to start and put targets into place so not to miss out on the rallies.
Will Gase
Grain Merchandiser, Upper Sandusky (Region 2)
Good afternoon and happy Friday, hard to believe July is almost over! Thanks to the Russia-Ukraine conflict oversees, we saw prices take a jump up this week. We made sizeable jumps in all three commodities. Russia has been bombing Ukrainian Export Facility and food processing plants for four straight days. They have two main objections in this. First is to make it extremely difficult for these export facilities to get grain out of the silos and into the ships, and second is to instill a fear factor into shipping and insurance companies on trying to travel through the black sea. Instilling fear into the market always brings volatility so keep a close eye on what is happening overseas.
Wheat harvest is all but done here in the north region. Quality seems to be good to excellent and yields were way above expectations. For those that planted double crop beans it looks like they are breaking through the ground and sprouting up. With how volatile the wheat market is, it would be a great idea to set target orders on the wheat that is on DP still to try and maximize your bushels.
Beans and Corn also made jumps this week and while corn is barely hanging on to 5.00 cash, it is always a great idea to minimize risk going into harvest and get some bushels locked in. As always give us a call to get bushels contracted or on target orders. Have a great weekend everyone!
Steve Bricher
Grain Operation Manager, Urbana (Region 3)
I just looked at the calendar and we only have a week left in July. Where did this month go? I have been out on my motorcycle around a lot of the area, and crop for the most part looks very good, other than they are a couple weeks behind what I would see as normal. I have a customer who also is a vegetable farmer on a large scale, they just started harvesting sweet corn this week which is as late as they ever have, and 10 to 14 days later than normal. This crop has been slow developing and is just progressing along slowly. We did pick up some rain in my area last evening which will be beneficial.
The roller coaster continues in the grain markets this week. The corn market traded to its highest level since the June 30 crop report. We had new crop cash corn back over 5.00 for a day or so. I am still in the camp that it is going too hard to push corn prices higher. The crop may not be trend line but it is still going to be enough to push carryout to over 2.0 billion bushel. If this does materialize we are going to see cash corn prices this winter in the $4 – $5 range.
Soybeans rallied this week and the farmer was able to sell harvest beans at 13.75 or better, that is the highest price you have been able to sell soybeans for harvest this year. The soybean story is a little different than corn as the reduced acres makes carryout a bit tighter so any kind of yield reduction gives us a story. The problem with soybeans is that Brazil is still shipping last year’s crop and will continue to ship well into the fall. We will have to see how many acres the South American farmer plants and what their weather does down there over our late fall and winter. Stay tuned.
I am not going to rehash the Russia-Ukraine war. It matters to the markets as the world needs the grain from that region but we don’t know from day to day what Putin is going to do. We will have to see how long the Russian people will continue to put up with the war and support him.
Keep an eye on your crops progress and if we need to get more sales on before harvest give us a call.
Lisa Warne
Grain Merchandiser, Marysville (Region 4)
Good afternoon! War and weather – those are the two keywords of the week. Tuesday and Wednesday’s rallies were spurred by Ukraine attacking the bridge that connects Crimea and Russia, causing Russia to back out of their Grain Deal which allowed export shipments to flow. Since then, Russia has announced they would treat ships in the Black Sea area as military vessels. Russia has attacked Ukraine ports and grain infrastructure four nights in a row. While there is still plenty of global wheat supply, all this new tension brings fear and uncertainty into the grain markets. Wheat is up around 40¢ since last Friday’s close. If you’re one to plant wheat every fall, these turbulent moments in the Black Sea might be a good time to look at July ’24 cash bids while they’re around $7.
Carryover strength from the wheat volatility along with hot and dry weather in the Central Corn Belt has rallied corn more than 25¢ and soybeans around 30¢ this week. While the 7-day forecast remains dry, there is a chance of rain in the “I” states at the tail end of the month. We’re hearing chatter that things west of here are dry, but not disastrous. We won’t be seeing record yields, but perhaps still a decent year. With 94 million acres of corn, that’s a big crop and $5+ straight out of the field may be a good deal. Have a great weekend and good luck to all the exhibitor families at the Union County Fair next week!