Mark's Market Talk

Jul 18, 2022

The past week was a downer for most commodities as a host of factors collided to influence traders. September corn closed the week 29 cents lower while the December contract ended 20 lower. August beans were 47 cents lower and November beans were 54 lower. Meanwhile the 3 wheat exchanges were down from 85 cents to 1.15, making them the leader in all of this. Outside markets were drivers as oil took a bath as news of more covid and higher inflation worldwide has investors feeling nervous. We had a late week report that showed inflation last month was higher than expected. The inflation number released was 9.1%, which was the highest rate since the early 80’s. Those of us that farmed thru that time remember how tough times became. The temptation was to buy everything today as it would all be higher tomorrow. That worked for a short time until interest rates increased and topped at 20% plus. Hopefully we get inflation under control quicker this time and avoid the high interest rates we saw 40 years ago. News from Ukraine seems to change daily. One day there is reports of grain exports starting to move. The next day we hear that Russia has attacked another grain facility. Weather continues to be a big newsmaker. The delayed corn planting season has delayed pollination and we are now entering the peak pollination season. With it we have current forecasts that include very high temperatures and small chances of rain. This coming week will be very pivotal with the US corn crop. If we get enough rain to maintain the predicted 177 yield, our ending stocks will be adequate and December futures will stay in the 5’s. However, if we lose 4 or 5 bushels to hot and dry weather suddenly our carryout drops to a tight situation that could push us back toward 7. The next 2 weeks may give us a great marketing opportunity, so we all want to stay informed and be prepared to make some new crop sales. For those still holding old crop the basis levels are very high, especially on the corn side. Bean basis levels have been more variable as crush margins and export needs have become a moving target. Some interior plants have shifted to the November contract for their lead month. You can read that move in a number of ways, but normally when they roll the lead month early the processors are trying to lower their cost as they keep some of the basis to start with. Some years this works for them and the producer losses a bit. But occasionally they find the remaining stocks are in tight hands and the basis levels have to improve in order to get supplies to carry them to new crop. World bean stocks are tighter than corn and the US bean price is very competitive right now which could lead to some late season export sales. The 4th of July fireworks have come and gone, but there are still lots of fireworks left in the grain markets.