THE LAND — MARCH 18/MARCH 25, 2022
www.thelandonline.com — “Where Farm and Family Meet”
PAGE 15
MARKETING
Grain Outlook
Global uncertainty keeps market volatile
The following marketing analysis is for the week ending March 18. CORN — Let’s repeat what we said last week: “Buckle up kids, we’re not finished yet.” The volatility in the market continues with low volumes being traded. Low volumes usually mean at times we see air pockets of trades with small numbers pushing prices further than they normally would. The Chicago Mercantile Exchange reported March 15 volume in the ag space was the lowest of 2022. The ongoing uncertainty in Ukraine provides underlying support. The ramifications of events on the other side of the world will likely last PHYLLIS NYSTROM at least a crop year. We heard of CHS Hedging Inc. a 15-point plan between the St. Paul countries in the first half of the week, but there was nothing to indicate it had affected the bombardment of Ukraine by Russia. Ukraine’s planting season is just beginning with the lack of labor and fuel the top issues in areas that aren’t under fire. Farmers have been exempted from military service, but that doesn’t mean they haven’t left the farm to fight for their country. Estimates have been floated that Ukraine won’t plant 39 percent of its spring crops. Ukraine’s Deputy Agriculture Minister said their winter wheat crop is in good condition and they will have enough bread this year. He stated they have enough stocks of wheat, corn and sunflower oil for their domestic needs. Their president is encouraging them to plant and focus on early harvested crops. According to the Ukrainian Grain Association, 80 percent of farmers have enough inputs to put in the crop, but fuel will be a huge problem. If you were a Ukrainian farmer, you’d have to decide to patriotically plant, but run the risk that when you harvest someone else may own the crop (Russia). Russia is planning to ban grain exports through at least June; but will allow some shipments under individual licenses but not to exceed their current quotas. It’s a horrible situation, but one we have to watch unfold and manage our own risk. The International Grain Council cut Ukraine’s grain export outlook for this year from 62.8 million metric tons to 47.8 mmt. Corn exports were cut from 31.9 mmt to 21 mmt. Russia’s grain exports were
Cash Grain Markets corn/change* St. Cloud $6.93 .00 Madison $7.05 +.21 Redwood Falls $7.12 +.23 Fergus Falls $7.00 -.06 Morris $7.15 +.14 Tracy $7.10 +.09 Average:
soybeans/change* $16.12 $16.24 $16.14 $16.29 $16.29 $16.14
+.02 +.38 +.23 +.18 +.18 +.23
$7.06
$16.20
Year Ago Average: $5.14
$13.83
Grain prices are effective cash close on March 22. *Cash grain price change represents a two-week period.
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 inflation? Remember, financial markets are considered “discounting mechanisms,” meaning they are looking six to nine months into the future. And by June 2022, the financial markets expect that inflation will be lower than today. (Investopedia. com, 2021) One lesser-known indicator which helps support that forecast is called the Baltic Dry Index. It measures the cost of transporting raw materials — such as coal and MARISSA JOHNSON steel. The index has been trendProfinium ing lower for several weeks, which in the past has suggested prices Wealth Management Advisor may be more manageable in the months ahead. (CNBC.com, Nov. 10, 2021) No indicator is fool-proof. That’s why the Baltic Dry Index is just one of the many indicators that our professionals follow when watching inflation. They also keep a close eye on the Federal Reserve System, which is responsible for controlling inflation. (CevelandFed.org, 2021) With the economy improving, the Federal Reserve has indicated it will be tapering bond purchases this month. That may help with inflation. The Fed also has prepared the markets for higher interest rates in 2022. That, too, may help. (CNBC.com, Nov. 3, 2021) For now, it’s important to understand that Inflation can influence interest rates, which often play a role in how a portfolio is constructed. We’re keenly focused on what’s next for inflation to determine if any portfolio changes are appropriate in the future. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
reduced to 37.1 mmt from 37.7 mmt. Demand has picked up for corn with huge weekly export sales as well as a few fresh sales announced during the week. The weekly sales number surpassed the highest estimate at 72.1 million bushels. This brings total commitments to 2 billion bushels and reaches 80 percent of the U.S. Department of Agriculture’s forecast with over five months left in the marketing year. We need 16.7 million bushels of sales per week to hit the USDA’s target of 2.5 billion bushels of exports. We saw a couple of fresh export sales flashes during the week. We should expect the USDA to increase this outlook on subsequent World Agriculture Supply and Demand Estimates reports. New crop sales at 8.1 million bushels were all to China this week. Total 2022-23 commitments are 84 million bushels vs. 71 million on the books last year. Weekly ethanol production was unchanged from the previous week at 1.03 million barrels per day. Ethanol stocks were the highest in 98 weeks (since April 2020) and a record for this week at 25.9 million barrels. Gasoline demand was steady at 8.9 million bpd. Record high prices of retail gasoline may begin to show up next week. The mid-Mississippi River has reopened and barges are moving out of the Dubuque area and will move north. At this writing, the workers on the Canadian Pacific Railway have authorized a strike but have not yet walked out. However, the railroad has said if no agreement is reached by March 20, the company would consider a lockout. Grain is the biggest business of the CP Railroad, but it also moves potash from Canada to the United States. High fuel charges have prompted fuel surcharges everywhere adding to the cost of movement. The National Oceanic and Atmospheric The forecasts or forward-looking statements are Administration released its updated weather forecasts for April through June. The map showed above- based on assumptions, subject to revision without normal temperatures with below-average rainfall. notice, and may not materialize. However, the eastern Corn Belt may have aboveThe content is developed from sources believed to be average rainfall. providing accurate information. The information in 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.
