Mark's Market Talk

Jan 10, 2022

It seems grain market volatility has become the norm. Commodities continue to move in leap and bounds on a daily basis. This has been a constant since October of 2020, and it doesn’t appear it will settle down anytime soon. This past week March corn was 14 cents higher while beans were 71 cents higher on the week. Most of this was driven by the dry weather in South America as southern Brazil and most of Argentina struggle with hot and dry conditions. On the other side, northern Brazil has seen too much rainfall and there are reports of white mold affecting bean plants. Harvest will start in some areas down there in about 3 weeks. Early yield reports will be looked at closely. The USDA will release their January WASDE report this Wednesday. This report will not only deal with the current supply and demand numbers, but it may also adjust the 2021 yields. Traders do not expect any wild changes, but we all know there might be a surprise hidden in the numbers. Narrow corn basis numbers might lead you to believe the corn crop has been overstated and maybe there isn’t as much out there. Domestic demand continues to be strong for both corn and beans. Processors are making money and plants are running at capacity. Exports have been lagging but we still see some sells every week. China needs to buy grain from someone, and they want to buy the cheapest. It is anticipated we will begin to lose bean sales to SA, but with the dry weather and high cost of inputs their safrinha corn acreage may get reduced which would be a huge plus for the US. Price volatility can swing both ways and it is not a dirty word on the way up. The object of this game is to make sure you don’t get rolled down the hill when conditions or rules change.