Mark's Market Talk

Nov 07, 2022

Last week we saw quite a contrast between corn and beans on the board. December corn stayed in it’s close trading range and ended the week steady with the previous Friday. On the other hand, beans caught a spark and the January contract closed 62 cents higher. A difference in demand explains most of the difference. Corn exports are poor as our corn is some of the highest cost in the world. China has been helping develop additional infrastructure in South America with the goal of taking more corn from Brazil. Historically this corn came the US, but in their quest to penalize the United States, China is doing all they can to bypass our commodities. The domestic demand for corn has remained strong, but that by itself will not support the current corn prices. River issues continue to hamper what exports we do have on the books. Basis levels between eastern Iowa and eastern Nebraska has been as wide as 90 cents. The short crop in Nebraska has forced area users to bid up for corn, while the river problems have pushed local basis levels lower. Beans found strength last week from additional export demand and the high crush returns processors are seeing. US beans remain very competitive on the world market creating further demand. Soy oil values have been very attractive to domestic processors and is allowing them to make record returns on the crush. Bean meal prices have also been very good. Even soy hulls have become very valuable as their use in cattle feed continues to increase the demand for a product that years ago was almost considered waste. Now that harvest is almost complete it appears the crop that was stored is probably there until sometime after the first of the year. This may create some selling opportunities for those that may need some income prior to yearend. Current planting weather in Brazil is non-threatening and they are ahead of normal on their bean planting. Current projections have them planting a huge amount of bean acres which will increase the world supply. Fall 2023 bean prices are not at the 13.00 many want to start pricing. However, another week like last week could get us there and that would be a good starting point to get some coverage on even if you are still carrying 22 beans. Normally our upper price cycle for grain runs 18 months or less. We are going on at 26 months so we may be on borrowed time here.