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!