Mark's Market Talk
May 01, 2023
A week ago, it appeared maybe we were close to putting a near term low in on the old crop bids. Sometimes appearances are not what they seem. July corn and beans ended this past week 30 cents lower while new crop contract prices were 22 lower. This was after we saw a 4-cent bounce on corn and 15 cents on beans last Friday. So maybe I was a week off stating we are looking at near term lows. There has been a lot of negative news that has weighed on prices lately. Brazil beans have been priced as much as 1.80 under our US beans. Now that their harvest is done their basis is improving, which will increase the price of the beans they have left to export. Farmers in that country have very little storage so they are at the mercy of the commercial elevators and once they own the beans, they have a place to hold them for higher prices. South American weather has been very friendly to the second crop corn that is growing. This was probably what led the Chinese to cancel 20 percent of the US corn they recently bought. They are booking cheaper Brazilian corn for late summer delivery. You have to wonder how it is they can cancel grain purchases without penalty. None of us have that opportunity to correct a mistake at will. The soy crush margins have softened and are at the bottom of a 3-year run. Ethanol demand was quiet last week as consumers adjusted to higher gas prices. Oil has backed off some the past 2 weeks which is good and bad. It might help demand but doesn’t support higher commodity prices. Late last week some analysts were predicting the fed will leave interest rates alone when they meet in May. This gave the stock market a shot in the arm, and if they follow through it would support commodity prices. But for now, our weather will be the primary mover. We still have over half of the crop to plant and the speed that happens will have an impact on prices. New crop prices are quite a lot lower than old crop. This has led to a very small percentage of new crop sales, especially corn. Most years we see some good selling opportunities in the late May/early June time frame. It might be hard to pick the correct time to sell this year due to depressed prices. It will give you some piece of mind if you are able to price some crops at a profitable level. Let’s hope we are given that chance.