Mark's Market Talk

May 16, 2022

The USDA released their May WADSE report last Thursday. There wasn’t any M80 explosions but there were some cherry bombs set off. This report gives traders the first glimpse of what the new crop production might be. They left the acres alone for now, but they did lower the expected corn yield 4 bushels. However, they offset much of this by reducing feed, ethanol, and exports. They did lower the 22/23 carryout to a tighter number than expected so the new crop corn pricing was the leader of the corn trade post report. The bean report was a yawner and considered neutral by most traders. Wheat gained strength in the world numbers as weather and war are paring our world reserves. Friday it appeared the teams switched players and beans shot higher on export numbers while corn prices were pressured by better planting weather and stiff price competition from South America as their corn harvest gets started. Old crop basis levels improved this week as farmers headed to the field and parked the grain trucks. Crude oil has been moving daily as the war continues to make waves in the energy segment as investors are trying to inflation proof their money. Oil and grain have always been some of the favored commodities for investors and it looks like they are leaning that way right now. Inflation breeds a lot of concerns for those that have seen the ugly side of this in the early 80’s. Interest rates are a lot lower now than they were then, but food and fuel are both becoming extremely expensive. This is forcing people to make choices of where they spend their money and for many food and shelter will become the priorities. 4.00 plus gas is hard on everyone’s budget. The extra money going into the tank must come from somewhere which means you have less money for the normal everyday things let alone any extras. Every penny counts at this point. By the way, grains ended last week mostly higher. The exception was July corn which was 3 cents lower. Dec corn was 28 cents higher as traders liked the reduced new crop carryout. July beans ended the week 24 cents higher while the Nov was 27 higher. Fundamentally the bean complex has looked to be top heavy, but they keep clawing their way back up the hill. World veg oil demand is making crushers a lot of money and some of that is trickling back to the producers.