Mark's Market Talk

Dec 13, 2021

I will start off with a disclosure - due to some conflicts I am writing this on Thursday night so anything that happened last Friday will not be reflected here. The USDA released their December WASDE report last Thursday. This report tends to be somewhat boring as they only change the demand side. The trade expected the bean carryout to grow a little and corn supplies to shrink a bit. However, the ending stocks of both crops were left alone. The world stocks did change fractionally as corn stocks were 44 million higher and beans 65 million lower. This report did not set any particular direction and a lot of times when we get a neutral report like this we trend sideways to lower. The difference this year might be the i-word, inflation. After many years of very low inflation, we are suddenly seeing a great amount of it. Just about everything you go to buy is higher than it was last month. Fund traders are always on the lookout for ways to offset inflation and a favorite item is commodities. As farmers you know that the price of inputs has gone up tremendously. To make that work the price of your crops will need to keep pace. And so there laies the issue. For those with old crop grain to sell the current prices will allow you to make a great profit. The price you paid for last year’s inputs where mild compared to today’s prices. That means you have some wiggle room to play the markets and still come out ahead. The 2022 crop will be harder to market profitably, and you will definitely need a much sharper pencil. It is always a good idea to know your production costs, and this will be very important in the coming year. If you haven’t taken time to scribble some numbers down, you best start. With fertilizer prices double and then some, along with the expected chemical price increases and the higher cost of fuel and repairs, your breakeven may scare you. But if you don’t know what that price is it is hard to know a good market when you see one. This past year was a piece of cake year. We had high yields and high prices at the same time. That rarely happens in our part of the world. This next year will test all of us and the cost to play the game of farming will have a huge buy in. We will all need to find a way to protect our investments.