Mark's Market Talk

Mar 21, 2022

We saw a quieter grain trade last week. The war in Ukraine has been going over 3 weeks now and does not look to end right away. It is still a factor in the wheat and corn markets, but with nothing changing it had less of an effect last week. Grain exports have all but stopped out of Ukraine and with a lot of the farmers defending their country the 22 crops may not all get planted. Even if the war stopped today inputs such as fuel and fertilizer are not readily available so getting corn planted would still be a struggle. For the week July corn was 16 cents lower while the Dec closed 10 lower. July beans were 5 cents lower last week while Nov beans finished 24 cents lower. We have a lot of factors moving the commodity markets and a developing issue is the lack of interest from the specs to invest right now. The initial margin to buy a grain contract has gone up as the grain prices have increased. That means it takes 3 or 4 times more money to buy a position than it did less than a year ago. Therefore, we are seeing very low trade volumes and when this happens you can suddenly see more volatility, as if we haven’t seen enough lately. Otherwise, the trade is still sorting out what we will plant in this country. All 4 major crops, corn, wheat, soybeans, and cotton are priced on the high side. Unless people have the fertilizer on for corn, some acres can switch right up to planting. This happens to some degree every year, this year it may amount to enough acres to move the markets. We will see the USDA’s perceptive planting report next week. It is always subject to change, and this year the changes may be more dramatic. Whatever farmers decide to plant they will be wise to cover some of their input costs while the market offers a profitable price. Crop insurance will offer better protection this year, but it will come with a higher premium. Fuel costs sometimes gets lost in farm budgets, this year it will leap off the page at you. Bottom line it will take a lot of money to operate this year. That makes having a marketing plan even more important. Not forward marketing has worked the last 18 months, there is no guarantee it will work the next 6 months.