January 31, 2022
Good morning,
Stronger markets overnight did not flow thru to this morning as overnight corn traded 2-6 higher while soybeans were 17 higher across the old crop board. This morning corn is down 7 and soybeans are only up 7.
The markets continue to take their lead from the energy sector with crude oil trading near $90/bbl with calls of $100/bbl in the forecast. This is allowing palm oil and soybean oil to trade to contract highs over the last month. Indonesia which is the world’s top exporter of palm oil has all but eliminated exports to protect their local markets supply of oil. Cooking oil prices have increased 40% in the past year. The increased palm oil prices have resulted in higher soybean oil prices the last couple weeks as export demand increases for these oils to replace the higher priced palm oil. With higher oil prices, soybean demand and crush have increased as plants look to capitalize on these markets.
The Forecast in South American is for above normal rainfall in Northern Brazil and below in Southern Brazil and Argentina. Over the weekend it was dry in Southern Brazil, and it rained between .5 to 2.5 inches up into Mato Grosso. There are chances of rain for Southern Brazil and Argentina next week and amounts will be between trace to an inch. It has not been quite so hot, but there is a small dome that is hanging around this week causing the dryness. The Argentine Rosario Grain Exchange says that most of the summer drought may be over but 50% of the crop is still experiencing stress. Southern Brazil was the one that really got smoked with the heat in the mid 100’s. This has a feeling of too late for any rainfall that may or may not be coming. Brazilian producers have harvested 11% of the 2021/22 soybean crop as of Friday.
I feel that we are getting close to a top in beans and corn. Loss of production in South America has been driving prices for the better part of 6 weeks. At some point the market will have had enough and we will see a reversal. I don’t know that it happens today, but it is inevitable as that’s how markets work.
The insurance period starts tomorrow for the spring revenue price. This will be one of the highest crop guarantee prices we have seen as well as the most expensive crop to put in. December corn is currently 5.75 and November beans are 13.65. I’m pretty sure that’s the highest price we have had coming into insurance.
I would recommend producers take advantage of some of the new crop prices that can be locked in. $5.50 Fall 2022 and $5.10 Fall 2023 are some very good levels to get some risk off.
Have a Safe Day!
Garry Gard
920-348-6844
January 27, 2022
Good morning,
Corn is down 3 and soybeans are down 4 to start the day. We are seeing weakness in the wheat market again this morning as that is trading 15 lower.
Russia is likely to remain on a diplomatic track with Kyiv and the West for at least two weeks but will continue efforts to destabilize Ukraine, Ukrainian Foreign Minister Dmytro Kuleba said on Thursday. Russia has massed troops near Ukraine’s border but says it does not plan to invade its neighbor.
The United States said on Wednesday it had set out a diplomatic path to address sweeping Russian demands in eastern Europe, as Moscow held security talks with Western countries and intensified its military build-up near Ukraine with new drills.
In a written response to Russia’s demands delivered in person by its ambassador in Moscow, the U.S. repeated its commitment to upholding NATO’s “open-door” policy while offering a “principled and pragmatic evaluation” of the Kremlin’s concerns, Secretary of State Antony Blinken said. (Reuters)
Many think any action taken by Russia will wait until after the Olympics have completed.
The weather pattern for Southern Brazil and Argentina looks to go dry over the next 10 days. Some light rain did fall in this region overnight and amounts were less the .25 inches with spotty coverage. Heavier rains are forecast for Northern Brazil over the next 10 days where they are already harvesting crops. So far it looks like the beans in Mato Grosso are coming in light on yield with most field averages down 20% from normal. This is worse than expected and is probably the reason for yesterday’s new high price movement. The high-pressure ridge has all but disappeared and temps have moved back to more normal.
Have a Safe Day!
Garry Gard
920-348-6844
January 24, 2022
Good morning,
Weaker markets to open the day with corn down 4 and soybeans down 18.
The Federal Open Market Committee (FOMC) will meet this week which is causing some concern for investors as clues to the imminent rate hikes that may be revealed. This has grains and energy markets lower this morning.
Rain across Southern Argentina over the weekend with amounts of 1.5-4.5 inches. Northern Argentina and Southern Brazil remained mostly dry. There are spotty chances of rain over the next 10 days for this same area, which has been in the forecast for the last week. The pattern has shifted to wetter and cooler with the regression of the high-pressure ridge.
The top story is still the tension on the Russian/Ukraine border. NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets, in what Russia denounced as an escalation of tensions over Ukraine. The move added to a flurry of signals that the West is bracing for an aggressive Russian move against Ukraine. Russia denies planning to invade Ukraine but has used its build-up of an estimated 100,000 troops near the border to force the West to negotiate over a range of demands to redraw the security map of Europe.
Have a safe day!
Garry Gard
920-348-6844
January 18, 2022
Good morning,
Corn and soybeans are feeling the pressure of rains that fell in South America over the weekend. Corn is currently down 3 and soybeans are down 19. The current rain system is going to linger for a while and will give some relief to the crops after the heat that they just endured.
Early planted corn and soybeans suffered irreversible damage from the recent dry conditions, but the later planted crops will benefit from the recent rains. These rains will aid the finishing of planting as roughly 15% of Argentine corn and are still had to be planted as of last week. Cooler temps are expected moving forwards with improved rains expected across Southern Brazil over the next 10 days.
Since the current export season commenced in September in the U.S. and February in Brazil, China’s accumulated soybean imports from the U.S. (December-January) have declined by 30% from a year ago to 17.8 million tons. The figure is lower than the levels prior to the U.S.-China trade war. On the contrary, Accumulated Brazilian soybean imports (April-January) have exceeded the prior season and reached 54.1 million tons. Sufficient supplies in Brazil are going to keep the Chinese sourcing from there until prices or supplies change.
Have a Safe Day!
Garry Gard
920-348-6844
January 13, 2022
Good morning,
Markets are softer this morning following thru on the overnight selloff with corn currently down 7 and soybeans down 17.
In yesterday’s report, the USDA raised their estimate of the 2021/22 U.S. corn crop by a modest 53 million bushels to 15.115 billion bushels from their previous estimate in November of 15.062 billion. Planted acreage was raised 53k acres to 93.357 million, while harvested area was raised 303k acres to 85.388 million. The average yield held at the November report estimate of 177.0 bushels/acre and will set a new record if it holds through the various final revisions which can occur over the next year or so.
The forecast for South America is just about the same as yesterday. Rain is forecast for Northern Argentina and Southern Brazil and some of these totals are expected to be heavy. This is the first meaningful rain in over 6 weeks. The long-range forecast also has rain in Argentina.
The USDA report is past us and there was nothing to move the market higher or lower which is probably a good thing. Look for the market to monitor South American weather in the coming days and weeks to get direction on what demand may be for US grains.
Have a Safe Day!
Garry Gard
920-348-6844
