This week’s action:
Corn March down 22 @ $6.46
Beans Jan up 5 @ $14.40
KC Wheat March down 42 @ $8.70
Feeders Jan up 3.95 @ $182.45
Fats Dec flat @ $153.25
Hogs Dec down 1.25 @ $82.450
Crude Jan up 3.04 @ $79.87
Corn Dec23 down 12 @ $5.99
Beans Nov23 down 1 @ $13.77
KC Wheat July23 down 33 @ $8.59
The highlight of the week was Thursday’s beat down in the row crop markets. January beans lost 35 cents Thursday and March corn lost around 20 cents Thursday/Friday. Soybean oil has had a rough week following the new EPA Renewable Fuels Standard proposal. They significantly lowered the expected blending obligations and approved canola oil to be imported from Canada to be used in biodiesel production. It is important to keep perspective in soybeans. The nearby market finished the week up a nickel. We are still up about 20 cents from November 1 and 35 cents above mid-November lows. Corn basis has softened up to 30 cents or more in some western corn belt markets. As we covered in last week’s recap, commercial elevators will be/have been sellers of firm front end premiums with no carry in the deferred markets. Rail logistics have been solid to southwest feed markets.
The latest Crop Progress Report of the year pegged winter wheat 34% good/excellent, which is 10 points lower than this time last year. Nebraska and Kansas good/excellent ratings are about 40 points below last year. The crop condition index has not been this low since 2012. Despite this, new crop KC wheat has lost $1.50/bu the last two months and is down about $3.50/bu from its highs in May. July23 is only trading about 75 cents above pre-Russian invasion.
Datagro, a private ag consultant, is forecasting the upcoming Brazilian bean crop at 153.3 MMT. If realized, that would be an increase of almost 1 billion bushels from last year’s production with total production being approximately 5.1 billion bushels. For context, America produced 4.35 billion bushels of beans this year.
USDA estimates 2022 net farm income to be $160.5 billion, up almost $20 billion from last year. This is a new record.
South American weather is favorable with new rains across North and Central Brazil over the weekend and improved rainfall chances in Argentina in 7-10 days. It will be 90-100 degrees this weekend in Argentina but La Nina is in decline which should lead to decent rainfall in December and January.
Dryness persists for most of the corn belt to start December. This week, the National Weather Service declared Nebraska the #1 driest state in the country in terms of topsoil moisture.
President Biden signed a bill Friday morning forcing a tentative agreement between the railroads and unions. Being passed by both the House and Senate, the bill increases worker pay 24% from 2020 through 2024. Immediate payouts average around $11,000. One of the main points of contention was unions wanting four days/year of paid sick leave vs the railroad stance of zero. This bill allows for one paid sick day per year. It was estimated a strike would cost the US economy $2 billion per day.
The Labor Department released their employment report Friday morning. They reported 263,000 new jobs compared to the expected 200,000. Unemployment remains at 3.7%. Average hourly earnings are up 5.1% year over year. Although the jobs report is positive, it does point to the FED continuing to raise rates into 2023 as the economy is still running hot. Rates are expected to be raised another 50 basis points next week, bringing the lending rate to 4.25%.
Pending home sales dropped 37% year over year, which is the largest decline on record. The impasse continues between home values and mortgage payments.
If you wanted to have a $1,500/month mortgage payment over 30 years:
Affordability at 3%: $360,000
Affordability at 6.5%: $250,000
Something that Probably Means Nothing:
The entire wide receiver group for Iowa football caught 72 passes for 752 yards and 2 TDs this year.
16 individual FBS players have more catches, 74 have more yards, and 370 have more TDs.
Enjoy your weekend!