Mark's Market Talk

Dec 27, 2021

The grain markets continued their post-harvest rally last week as March corn gained 12 cents while March beans ended the week 52 cents higher. The number one mover was the dry weather in southern Brazil and Argentina. There are areas that have lost some yield potential and if they don’t see some decent rain the next 2 weeks it will worsen. However, at the same time there are some fantastic crops in central and northern Brazil that may offset much of the southern loss. Last Friday it appeared at the opening traders were going to sell off and take some money home for the 3-day holiday and come back Monday with a better understanding of the SA weather. But then corn and beans both headed back into the positive area, and they closed higher. So, it seems they decided to carry the risk thru the weekend. Now it becomes a wait and see game on the weather. Fresh export sales were scarce last week. That might be because of the holidays, but in the case of China they seem to be holding out for new crop beans out of Brazil. Harvest may start there a month earlier than normal and that could send buyers to them instead of the US. Domestic usage of corn and beans continues to be strong as processors of both commodities are making very good margins. Soy oil and meal are both helping the soy trade as demand remains very strong. Ethanol producers are doing well as crude prices are staying strong and demand is growing. Basis levels are still on the strong side for this time of year and that is helping keep values high. Besides the SA weather the next market news will be the January crop reports which will have supply and demand numbers plus possible yield adjustments for the 21 crops. The trade is already anticipating a lower bean export number in this report, if they were to raise last years yield it would be a double whammy. So, a lot will be happening in the next 3 weeks as we enter a new year. We all need to keep our eyes open on both old crop and new crop pricing. New beans are really close to 12.00, but new corn is struggling to get much above 5.00. If an acre shift were to happen, I think these could reverse and corn is suddenly the leader. The fate of crude and wheat will also influence the corn market, if they both climb higher so will corn. And finally, the resurgence of covid cases brings threats of slow downs and lock downs. Our supply chain is still running way behind and the last thing we need is any more slow down. We talk about the new norm which includes constant supply issues. I want to go back to the old norm where if they don’t have it, it will be here tomorrow.