Marketing

Grain Outlook Keep an eye on trade levels

Editor’s Note: Joe Lardy, CHS Hedging research analyst, is sitting in this week for Phyllis Nystrom, the regular “Grain Outlook” columnist.

The following marketing analysis is for the week ending Feb. 25.

We were all part of a historic week. The events occurring across the globe are sad, and scary, and very unsettling. But our markets are still open and working, so let’s do our best to make sense of what’s happening.

CORN — March corn futures closed last week at $6.54.25. This week we closed at $6.59.5. A 4.25 cent gain in wickedly volatile markets feels like something bigger.

Corn inspections at the start of the week were big. We are now seeing the ramp up into the key export window. Ethanol production was up this week, but the JOE LARDY levels aren’t turning any heads CHS Hedging inC. yet. Four of the past five years St. Paul have better production levels for this week.

In Brazil, the safrinha corn is about 65 percent planted. This is much better than last year’s very slow pace. With the crop not planted, we haven’t seen the big production cuts; but the weather is worth watching. In La Niña years, there is a tendency for the rainy season to end early which could

Cash Grain Markets

corn/change* soybeans/change*

Stewartville $6.86 +.86 $16.05 +.96 Edgerton $7.01 +.83 $16.15 +1.39 Jackson $6.78 +.50 $15.72 +.86 Hope $7.03 +.94 $16.12 +1.34 Cannon Falls $6.73 +.76 $16.20 +1.32 Sleepy Eye $7.01 +.81 $16.30 +1.44 Average: $6.90 $16.09 Year Ago Average: $5.10 $13.62

Grain prices are effective cash close on March 1. *Cash grain price change represents a two-week period.

hurt corn production.

The U.S. Department of Agriculture’s outlook conference has estimated corn acreage for 2022-23 at 92 million acres. They are using a record yield of 181 bushels per acre. This leads to a production figure of 15.24 billion and ending stocks of 1.965 billion. At face value, that’s a bearish estimate; but man-ohman that’s one aggressive yield forecast.

The situation in the Ukraine has more of a direct impact on the world balance sheet as the Ukraine is a major exporter. It unknown what the flow of ag products will look like in the coming weeks and months. There have been reports a grain vessel suffered a missile attack. They are just so many unknowns in this unprecedented event.

Outlook: The corn situation is has more unknowns. U.S. inspections are picking up and South America still has a weather situation and those should provide a bit of underlying support. But the Ukraine situation has the ability to move these markets.

SOYBEANS — The March soybean closed last Friday ahead of the long weekend at $16.01.5. It was the first close above the $16 mark. The close at the end of this week is $15.90.25. So despite the massive volatility, the soybean market is only down 11.25 cents.

Soybean inspections started out the week keeping pace with recent activity. We haven’t seen the sharp drop-off in inspections quite yet when the transition to corn shipments kicks in. The longer our window stays open, the better the chances for a bump up in the USDA’s export figure. There were a couple more flash sale announcements this week to China and unknown.

The situation is South America hasn’t changed much. The latest crop estimates show stable estimates instead of fresh production cuts. But the damage has already been done. The USDA however, does have plenty of room to make additional cuts in the March World Agriculture Supply and Demand Estimates report.

The USDA outlook conference was held virtually again this year. They released their first ideas about the 2022-23 crop on Feb. 24. Soybean acreage is pegged at 88 million with a yield of 51.5 bushels per acre. This leads to a production figure of 4.49 billion bushels and a carryout of 305 million bushels. While this is not a critically low pipeline number, it does tighten up the market a little and will once again put more emphasis on spring weather. It also signals that our volatile markets should hang around for a lot longer.

Outlook: The base fundamentals for the bean market remain in place. A tightening balance sheet, smaller South American crops, and good crush levels are all bullish inputs. But the impact of the Russian invasion is impossible to measure. If we see an overall risk off mentality the market will see weakness. If there are levels you want to trade at, have orders in. The volatility has been large and should remain that way. v

Information in the above columns is the writer’s opinion. It is no way guaranteed and should not be interpreted as buy/sell advice. Futures trading always involves a certain degree of risk.

Global Dairy Trade auction continues to draw interest

MIELKE, from pg. 14

Milk futures above $25 per cwt. would be the highest monthly Class IV settlement ever if prices continue to hold.”

“The Bureau of Labor statistics highlighted the domestic inflation situation reporting that food prices jumped by 7 percent in January with dairy products at retail costing 3.1 percent more than they did last year. USDA’s February World Agriculture Supply and Demand Estimates report featured a smaller than expected cut to South American crop estimates though private forecasters expect much lower corn and soybean outlook for Brazil and Argentina than current USDA forecasts which continues to support feed markets,” the Margin Watch concluded.

Lastly, the Analyst says 2022 average farm-level cash breakeven margins have risen to $20.01 per cwt in its latest model update, which uses CME futures prices to estimate feed costs. This is up from the last estimate of around $19.30. “Over the last month, several milk producers called, from Wisconsin to California, and tell us their break evens are closer to $21.00,” the Analyst concluded. “Even still, with the latest milk checks in hand, farmers are in profitable territory.”

Lee Mielke is a syndicated columnist who resides in Everson, Wash. His weekly column is featured in newspapers across the country and he may be reached at lkmielke@juno.com. v

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