Mark's Market Talk

Feb 07, 2022

We saw a mixed trade last week in the commodity markets as corn and wheat both closed lower while beans were strongly higher. March corn ended 15 cents lower while the December contract closed 4 cents higher. China cancelled some nearby shipments mid-week and that put a damper on old corn. The weather in South America is still erratic and somewhat hard to read on the corn side. The first crop corn is no doubt hurt some, we just don’t know to what extent. New crop has started to move higher perhaps just to hold some acres. With new crop beans pushing higher each week, the corn market will need to react in order to hold acres. November beans closed 44 cents higher last week while the March contract jumped 83 cents. Beans continue to be a favorite inflation hedge for many investors. When you add in SA weather issues and new exports sales, beans are exciting right now. They are not the only commodity pushing higher at this time. April live cattle ended last week north of 1.46 while April hogs were above a buck. Crude oil is holding above 90.00 which is supportive to ethanol while it hurts our pocketbooks at the same time. Some people are predicting we will see big runups in a lot of things post covid. They go so far as to compare it to the times we saw post war in the teens and 40’s. Dirt cheap interest and high inflation may lure many into trouble. It is easy to withstand high inflation if you can borrow cheap money. High interest rates in the late 70’s – early 80’s put an end to the high inflation we had then. Right now, there isn’t much to reign it in so we are starting to see people spend money quicker than normal thinking whatever they are buying will be higher next month. That will only last until the money starts to run out and then we will need to adjust our thoughts. As farmers you are on both sides of this issue, and it takes a lot of planning to make sure those sides do not collide on your cash flow sheet. Last side note, the USDA will release their February WADSE report this Wednesday. Most think it will be a sleeper as everyone is waiting for the planting intention report in March. However, there could be a sudden surprise in Wednesday’s report so pay attention.