Mark's Market Talk

Nov 28, 2022

Thanksgiving has come and went. Many years this holiday can be a tipping point for commodity prices as harvest is normally finished and the trade is digesting the known numbers and guessing what information they don’t have just yet. This year it is still unclear where the final yields will fall. For all of the good yields we heard of, it appears there are almost an equal number of poor yields. The December reports will give us a little more direction here. It is interesting to compare where prices are today compared to a year ago. Locally corn is 95 cents a bushel higher, while beans are 1.90 higher than a year ago. We need to keep this in mind as we finish marketing the 22 crops. Last winter we had a good rally in both corn and beans and those that held their crop were rewarded nicely. This year we are starting at a higher level so a repeat performance might be more difficult to achieve. We are also facing some challenges that were not an issue a year ago. Top of this list is inflation and the war in Ukraine. Interest rates whether you are borrowing to farm or borrowing to buy a house are suddenly a major expense. Home sales have almost stopped as many people find themselves unable to afford the mortgage payment. Some farmers may find they are in a similar position holding grain. If your operating loan is 7 percent, it will cost you 8 cents a month in interest to carry them. 8 percent money it will cost you 9 cents a month. These are numbers we didn’t look at a year ago as interest was cheap and the carrying charge was manageable. This year it will be more difficult if you have money borrowed against the crop. Traders will be watching the South American weather for the next 3 months as their crops get planted and move toward harvest. Today Brazil seems to be on pace to plant record acres while Argentina has been slow to plant beans due to the dry weather they are experiencing. Meanwhile the drought monitor in the United States shows we still have a lot of areas short of moisture. Winter is normally not the time we gain subsoil water. It will have to wait until spring. The markets will continue to trade somewhat volitively in the coming months. The smart marketer will have a plan to jump on the opportunities as they present themselves. Timing will be everything as we proceed thru winter.