Mark's Market Talk

Nov 15, 2021

The USDA released their November WASDE report last Tuesday and once again they surprised everyone with their bean yield estimate. Just about the entire trade was expecting them to raise the national yield to something close to 52 bushels. Instead, they actually lowered it 3 tenths of a bushel to 51.2. They did lower exports as was expected and the carryout did grow, but the final number of 340 million was lower than the trade was thinking. Tuesday morning beans were trading lower into the report and then shot up 30 cents after the report was released. January beans ended the week 39 cents higher, and it was all because of this report. Many argue they missed the yield, but for now we trade off the numbers they gave us. Some think China was holding back on their orders thinking this report would send prices lower, now they may have to pay up for some beans to get to the South America harvest which may come a month early this year. Domestic crushers are running full speed as they are making very good money on soy oil. However, we still need to see our export sales increase in order to support the current price levels we have. If the carryout grows to 500 million plus like most predict sub 10.00 beans are in our future. If we add the expected increase in bean acres for next year, we may head to sub 9.00 beans. That would make the current new crop price of 11.70 plus look good. The report was neutral on the corn side. They did raise the average yield 4/10ths of a bushel to 177. They also raised the usage, so the carryout dropped 7 million bushels. December corn closed the week 24 cents higher. Right now, corn has some positives in its favor. Wheat is leading course grains higher as world stocks are low. The ethanol business is booming and eating lots of corn. China still needs to source corn to supplement their low stocks. They are pricing around the world, but many feel they will need to buy from the US to get the quantity and quality they want. The high cost of fertilizer will also demand a higher corn price to hold acres. The board is not currently offering enough to get excited about pricing new crop corn at this point. For those that have not priced their fertilizer it may take 5.00 to break even, depending on yield and land cost. The past year has been a wild ride in the grain markets. I would not unbuckle your seat belt yet as the coming year may be just as wild.