Mark's Market Talk

Feb 14, 2022

It is becoming a broken record every week when I sit down to write this blog. Last week’s grain trade was volatile. First, we had the USDA’s February WADSE report on Wednesday. Normally this report is a sleeper and this one was about as tame as they come. They left the corn numbers alone top to bottom and the estimated carryout stayed at 1.54 million bushels which is a neutral number. They did make some adjustments on the bean side and the estimated bean carryout was lowered 25 million bushels to 325 which was within expected projections. However, the trade made this report look bullish as they pushed both crops higher. Thursday morning started out quiet with slightly higher markets. Then the South American form of the USDA released their updated crop estimates, and they were lower than expected and the bean market was off to the races as the specs jumped right in and pushed it 35 cents higher. But by the end of the day everything was lower. It looked like a one-day wonder and then Friday morning we saw a rebound trade taking place. At noon it looked like we might end the day a few cents higher on corn and beans. Then news broke that the US military was telling Americans in Ukraine to leave immediately as it appeared Russia was planning to invade the first of next week. Corn suddenly became the leader since if Ukraine becomes shut out of the export market, it may be up to the US to supply the world. A big disadvantage to writing this blog on Friday is all the things that can happen worldwide during the weekend. This invasion story could easily change by Monday, and we may see some retreatment. Or it happens and before you know it, we may be in uncharted territory. Anyway, last week we saw March corn close 31 cents higher while the Dec was 21 higher. March beans where 30 cents higher and the Nov contract was 48 higher. This is all taking place while farmers are finishing their 2022 planting plans. For those that haven’t made definite plans for their acres, the facts keep changing which may lead us to have a highly unpredictable end result in acre numbers. This is not just a corn bean war this year. All the major crops are looking for acres including wheat, cotton, and sorghum. Add in the USDA chasing more CRP acres and the amount of the country still in drought conditions, and we will continue to see weekly market volatility. With all this happening at once it becomes very hard to give solid advice. I think the best advice right now is for producers to tune up their ability to gain information. Knowing your breakeven is always important. This year it is a must. Inputs have increased at a historical pace. Timing of purchases will lead to a wide variety of break evens. Those that bought their fertilizer early last fall will have a huge advantage over those that still haven’t bought. Bottom line every operation will have a different breakeven, this is not unusual. The huge difference from top to bottom will be wild this year. If you didn’t buy your inputs at the right time, it is now necessary to market your crop at the right time to make things work. Sharpen your pencils now and get those costs put together so you know where you are at and get a plan going. That is the same advice you hear every year, this year it is more important than ever.