Mark's Market Talk

The USDA released their January reports last Thursday. This report is normally a market mover as they tie a lot of numbers into it. They make what they call final adjustments to the latest crops, although we have known them to change things later. They update their supply and demand report, and they post the December 1 grain stocks. The DTN looked like a pin ball machine as soon as they released the report Thursday. The good part was it pushed the markets higher from the start. Most of you have seen the numbers by now so I will just highlight a few. They did raise the 22 corn yield a bushel, but that was more than offset when they lowered the harvested acres 1.6 million. This was due to the drought in the western plains forcing guys to chop a lot of corn. They reduced exports 150 million bushels, which was expected, and played with the rest of the demand numbers a bit. When it was all said and done, they lowered the carry out 15 million bushels. That by itself wasn’t that bullish, but the trade was expecting the carry out to increase so this was good news. For the week March corn was 21 cents higher while the December contract closed 7 higher. The surprise in the bean numbers was they lowered the yield .7 bushels down to 49.5. Like corn they lowered the export numbers and jostled some other things and ended up with a carry out of 210 million bushels which was 10 million lower than expected. For the week March beans were 35 higher while the Nov was 4 cents lower. The bull spreading was the result of a couple things. Old bean supplies remain a little tight and unsure as South America begins their harvest. Argentina weather is poor and is reducing their crop, while most Brazilian crops are faring well. Meal continues to help drive nearby prices as the demand is strong worldwide. The softening of crude prices has affected the price of veg oils, so we are not getting the help there that we saw in the past year. As more bean plants start up to produce the “green diesel” we will see higher demand for domestically processed beans which will help the US bean market long term. Looking down the road post report it appears we will continue to have good support under corn and bean prices near term. The goal should be to market on the upswing days as we head toward planting. Lots of people are pricing new crop corn, but very few are selling as we can’t seem to get to 5.75 or better. Meanwhile we are seeing some new beans being priced in the 13.50 range. Though there is a February S&D report, the next big report will be the March planting intentions report. Normally we see an acre war prior to that and perhaps it will give us some better new crop opportunities.