This week’s action:  

Corn Dec up 3 @ $6.78

Beans Nov down 59 @ $13.66

KC Wheat Dec up 42 @ $9.92

Feeders Nov down 3.475 @ $174.70

Fats Dec down 1.67 @ $147.00

Dec Hogs down 6.20 @ $76.40

Nov Crude up 1.06 @ $79.80

Recap:

USDA released September 1 Quarterly Stocks this morning. Corn stocks were reported at 1.377 billion bushels, below the range of estimates but about 100 million more than last year. Soybean stocks came in at 274 million, which is about 30 million more than estimates and 20 million bushels higher than last year. All wheat was reported at 1.776 (go America!) billion bushels, in line with expectations and similar to a year ago. USDA did lower winter wheat harvested area 1.5 million acres.

Front end basis opportunities for corn and soybeans are moving daily, but harvest bids remain historically strong. We need to be communicating about what bin space is worth on the farm as interest rates are increasing. Whether that be delivering more bushels to town at harvest or lock in advantageous deferred basis levels. Broadly speaking, FOB bids for south central Nebraska corn are +40-70h for JFM and higher as you move south and west.

Forecast:

Generally favorable harvest weather to begin October.

Outside Markets:

The Dow Jones is down 20% YTD and is now back to February 2020 levels, below 30,000 points. The British Pound is the lowest value vs the US Dollar since the mid-1980’s. The UK is stuck between raising interest rates to slow inflation while simultaneously attempting to cut taxes to stimulate their economy. There are rumors some UK pension funds are in trouble as they were highly leveraged chasing yield in a low interest environment. This strategy does not work well as stocks decline and interest climbs. Don’t be surprised if you start hearing this about funds domestically. Crude oil prices are down 5-10% this month as the world grows weary of an economic slowdown. Many tech firms and investment banks have been announcing large layoffs as “free money” stops, and stock prices bring down company valuations.

Interest rates on 30-year mortgages tickled 7% this week; the highest since 2007. A $2,500/month mortgage with 20% down now affords a $476,000 house. In early 2021, that same monthly payment could have purchased a $759,000 house. That is a decrease of 37% in purchasing power. IF values fall to reflect this interest rate move, a $400,000 house a year ago becomes a $250,000 house.