THE LAND — MARCH 18/MARCH 25, 2022
www.thelandonline.com — “Where Farm and Family Meet”
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MARKETING
Grain Outlook End users look to replace supplies The following marketing analysis is for the week ending March 11. CORN — We have been experiencing extremely volatile markets as we witness history in the making. Markets don’t usually like uncertain times and now is no exception. Relatively speaking, July corn had a quiet week with a 45.5 cent trading range and closed 7.5 cents higher for the week at $7.28.75 per bushel. The July contract set a new contract high at $7.47 per bushel. The December corn traded a 28.75 cent range and closed 25.75 cents higher at $6.55.25 per bushel. December corn posted a new high contract close and a new contract high at $6.56.25 per PHYLLIS NYSTROM bushel as the week ended. From CHS Hedging Inc. the close on Feb. 18 (before the St. Paul Russian invasion of Ukraine) to the March 11 close, July corn has rallied 76 cents and December corn has gained 57.5 cents. The importance of Ukraine in global corn trading has been the underlying factor in this jump higher. Ukraine and Russia combined account for 17 percent of global corn exports and 28 percent of world wheat exports. Ukraine is sixth in world corn production and ninth in world wheat production. If fighting were to end today, it will take time to rebuild Ukraine’s infrastructure in addition to getting people back in place. Planting time is quickly approaching for Ukraine. Their growing season is roughly on the same schedule as the U.S. corn belt. While farmers have been exempted from military service, that doesn’t mean they aren’t participating, and getting enough farm labor will be difficult. Fuel is in short supply and could undercut progress. Fertilizer availability is in question, as it is in the United States and South America, after Russia halted fertilizer exports. Ukrainian farmers are being encouraged to plant crops which will be harvested in the summer — such as buckwheat, oats, millet, and peas — to help provide needed food sooner than later. The UN Food and Agriculture Organization estimates 20-30 percent of Ukraine’s winter crops, as well as corn and sunflower crops, may not be planted and/or harvested this year. The March 9 World Agriculture Supply and Demand Estimates report was mostly neutral and largely ignored in favor of world headlines. The 2020-21 carryout was unchanged at 1.235 billion bushels. On the
Cash Grain Markets corn/change* Stewartville Edgerton Jackson Hope Cannon Falls Sleepy Eye
$6.54 $7.03 $6.99 $6.90 $6.75 $7.03
-.32 +.02 +.21 -.13 +.02 +.02
soybeans/change* $15.72 -.33 $15.66 -.49 $15.76 +.04 $15.68 -.44 $15.73 -.47 $15.78 -.52
Financial Focus Is inflation peaking?
You see it in prices at the grocery store and the gas station. You feel it in your monthly budget. So why don’t the financial markets seem too concerned about Average: $6.87 $15.72 inflation? Remember, financial markets are considered “disYear Ago Average: $5.23 $13.74 counting mechanisms,” meaning they are looking six Grain prices are effective cash close on March 15. to nine months into the future. *Cash grain price change represents a two-week period. And by June 2022, the financial markets expect that inflation will 2021-22 balance sheet, there were no changes to the be lower than today. (Investopedia. supply side. On the demand side, ethanol was raised com, 2021) 25 million bushels to 5.35 billion bushels and exports One lesser-known indicator jumped 75 million to 2.5 billion bushels. This cut which helps support that forecast ending stocks 100 million bushels to 1.44 billion is called the Baltic Dry Index. It bushels and the ending stocks to use ratio to 9.6 percent from 10.4 percent last month. The average farm measures the cost of transporting MARISSA price increased by 20 cents to $5.65 per bushel. raw materials — such as coal and JOHNSON steel. The index has been trending Brazil’s corn was unchanged at 114 million metric Profinium tons (4.5 billion bushels) with exports steady at 43 lower for several weeks, which in Wealth Management the past has suggested prices may mmt. Argentina’s corn crop was lowered 1 mmt to 53 Advisor mmt (2 billion bushels) with exports unchanged at be more manageable in the months ahead. (CNBC.com, Nov. 10, 2021) 39 mmt. Ukraine’s corn exports for 2021-22 were No indicator is fool-proof. That’s why the Baltic Dry lowered 6 mmt to 27.5 mmt while its corn production was down just .1 mmt at 41.9 mmt. China’s corn Index is just one of the many indicators that our proimports were estimated at 26 mmt (1 billion bushels) fessionals follow when watching inflation. They also and unchanged from last month. China has 260 mil- keep a close eye on the Federal Reserve System, lion bushels of U.S. corn left to ship in this marketing which is responsible for controlling inflation. year. World corn ending stocks were at expectations (CevelandFed.org, 2021) at 301 mmt vs. 302.2 mmt last month. With the economy improving, the Federal Reserve Weekly export sales were the highest of the market- has indicated it will be tapering bond purchases this ing as end users look to replace lost Black Sea sup- month. That may help with inflation. The Fed also plies and overall uncertainty. U.S. growers moved has prepared the markets for higher interest rates in bushels on the first round of the rally and sales have 2022. That, too, may help. (CNBC.com, Nov. 3, 2021) slowed down considerably. Weekly sales were 84.4 For now, it’s important to understand that Inflation million bushels to bring total commitments to 1.97 can influence interest rates, which often play a role billion bushels of the U.S. Department of Agriculture’s in how a portfolio is constructed. We’re keenly 2.5 billion bushel forecast. Sales are down 16 percent focused on what’s next for inflation to determine if from last year and we need 18.9 million bushels of any portfolio changes are appropriate in the future. sales per week to hit the USDA’s new target. New crop Investing involves risks, and investment decisions sales this week were just under one million bushels. Total new crop sales are 75.9 million bushels vs. 61.2 should be based on your own goals, time horizon, and risk tolerance. The return and principal value of million bushels committed last year on this date. investments will fluctuate as market conditions Weekly ethanol production was up 31,000 barrels change. When sold, investments may be worth more per day to 1.03 million bpd. Ethanol stocks rose by or less than their original cost. 338,000 barrels to 25.27 million barrels. The forecasts or forward-looking statements are As far as South American corn goes, the Buenos based on assumptions, subject to revision without Aires Grain Exchange improved Argentina’s corn rat- notice, and may not materialize. ing 4 percent to 25 percent good/excellent with 5.7 The content is developed from sources believed to be propercent of the crop harvested vs. 4.9 percent on averviding accurate information. The information in this mateage. The Rosario Grain Exchange has Argentina’s corn rial is not intended as tax or legal advice. Please consult See NYSTROM, pg. 16
See JOHNSON, pg. 16
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.
