Mark's Market Talk

Jan 30, 2023

We are almost to the end of January; the days are starting to get longer and yet we are looking at below normal temperatures. However, everyday is a day closer to spring and before we know it the oats will be going in and new calves will be showing up everywhere. For our counterparts in the southern hemisphere, the first harvest is just starting. That is where the action is in the world and traders throughout this country have their eyes set on this event. Every year there all kinds of speculation of the size of the South American crop and this year is no different. If anything, it is drawing more attention this year as we have been told from the start that the Argentinian crops were going to be poor. We have also been told that the Brazilian bean harvest will be so good that it will more than make up for any shortage to the south. We will now see all of this play out in the next 6 weeks. The slow start to the Brazilian harvest is forcing China to buy beans from the US for longer than they planned to. This along with good domestic demand is keeping nearby beans stronger than expected. This past week we saw March beans close 3 cents higher while the November contract was steady on the week. On the board March beans were 1.58 higher than the November on Friday afternoon. The spread is greater if you look at local bids as the old crop basis is still strong. March corn last week was 7 cents higher while the December closed 8 cents lower. The funds have bought a lot of old crop contracts lately and yet it is unsure why. Corn exports remain poor, gas usage is declining, and poor wheat prices may entice feedlots to replace corn with wheat in the cattle diets. Meanwhile new crop corn in the bottom half of 5 dollars is not getting much attention. We need to remember that we could be on borrowed time here on old crop prices. We sometimes allow ourselves to get complacent about now in a price cycle, doing so today may become costly.