This week’s action:
Corn March down 1 @ $6.68
Beans Jan up 8 @ $14.35
KC Wheat March down 12 @ $9.12
Feeders Jan down 3.025 @ $178.475
Fats Dec down .025 @ $153.325
Hogs Dec down .80 @ $83.70
Crude Jan down 3.43 @ $76.83
Corn Dec23 up 1 @ $6.11
Beans Nov23 up 8 @ $13.78
KC Wheat July23 down 19 @ $8.92
Recap:
Ag markets had a quiet week as the market is lacking headlines with harvest finished. Focus has shifted to figuring out where grain needs to move and how to get it there. Corn basis has softened a bit as grain elevators and farmers have done a good job of selling historic front-end basis premiums with no carry in the deferred market. Corn export commitments are only 48% of what they were a year ago. Going forward, the US needs to book an average of 34.4 million bushels/week to hit USDA’s export total of 2.150 billion bushels. Last year at this time, the US only needed to maintain a 26.0-million-bushel weekly average to hit export projections.
Be mindful of how a commercial elevator looks at the basis/carry market, especially with higher interest rates. (And maybe how you should, too.) If they can’t guarantee future breakeven basis above what they can sell today, they will be/have been big sellers.
China has reported a 7-month high in Covid cases, sparking mass lockdowns across the country. This has created more uncertainty around their ag imports. Last year at this time China had 436 million bushels of corn on the books to be shipped vs just 76 million for the rest of the 2022/23 crop year currently.
American farmers aren’t the only ones who can take advantage of higher prices. India has planted 37.8 million acres of wheat compared to 34.1 million acres last year. Their planting season goes through December. French soft wheat is rated 98% good/excellent following a warm and damp fall season. Brazil is on pace for a record large soybean crop. Australia is also expected to have a record large wheat crop soon. The Argentine soybean crop is only 19% planted compared to 39% last year as farmers are doing their best after a slow start due to dryness. Argentine corn planting is 24% done vs 30% a year ago.
Forecast:
Most of the US corn belt remains dry over the next week but snow may fall in parts of Texas/Oklahoma. Parts of the southeast will receive rains. Parts of southern Indiana and Ohio may also get rain soon.
There is limited precipitation forecast for Argentina and Southern Brazil over the next week. Rains are forecasted for Northern Brazil.
Outside Markets:
Economic news was mixed this week. Home sales rose in October and consumer sentiment is improving. The US dollar has softened lately with belief the FED may be losing enthusiasm for continued rate hikes into 2023, though the expectation is rates will still be raised another .50% in December. Although well below year highs, the DOW is up about 25% from its October lows and the S&P 500 up about 15% over the same time. The Nasdaq is up about 12% as well. The weekly unemployment claims were 240,000 potentially showing some cracks in the armor of the labor market.
Something that Probably Means Nothing:
Following volatile price swings since January 1, the price of crude oil is now down around 1% in 2022. Energy stocks are up 68%.
*Graph from @Charliebilello on Twitter.