Mark's Market Talk
Oct 18, 2022
The USDA released their October Supply and Demand report last week. On the corn side they left the harvested acres at 80.8 million, some expect this number to shrink before the next report due to the amount of drought acres being harvested for silage. They lowered the yield .6 bushels down to a 171.9 average. It is normal in a short crop year for the yield to shrink as we proceed thru harvest, and it appears that may be the case this year. There are areas of excellent crops, but in order to get or exceed trend line yields we need average to better crops across the nation and that is not happening this year. They lowered the beginning stocks 148 million to match the September reports so when they added it all up, we start the year with 13.895 billion bushels of corn. They did adjust the demand side, but the domestic demand stayed the same at 12 billion bushels. The big change came on exports where they lowered the expected exports 125 million bushels, some think this is not a big enough cut as we are not competitive worldwide. This all tied together brought the ending stocks down to 1.172 billion bushels which is slightly bullish. The surprise of the report came on the bean side where they reduced the expected yield .7 bushels which lowered production 65 million bushels. They predicted some lower demand numbers and left the carryout at 200 million bushels which is a tight number but not tight enough to push us to 15.00. At the end of last week corn was 6 cents higher while beans were 17 cents higher for the week. Harvest is nearing the halfway mark and in years of similar production that means we may have seen the harvest lows. However, we have issues that we don’t always see and right now the number 1 problem is low water levels in many of our main rivers. The Mississippi River is very low which is restricting the amount of freight moving both ways right now. Bean sales and exports are very strong but if we can’t get them to the port, we will have a problem being the reliable supplier to the world. Crop inputs are not coming back up the river in a normal fashion and this will impact fertilizer supplies and prices this fall and clear into the spring season. The rail strike that was averted a couple weeks ago is back in the news as one labor union has rejected the offer, and this will send both sides back to the table. A shortage of commercial drivers is affecting truck traffic in many areas which will affect our ability to move everything. And if that wasn’t enough bad news, the supply chain is still broken and finding repair parts is still difficult. Perhaps the best advise on crop marketing at this time is to write down when you need money in the coming months and market accordingly. Interest rates are moving higher, and you must enter this cost into your thinking. Low interest rates the past several years are over and we will have to deal with rates that are almost double what we were paying a year ago. Even though we are facing several negatives, we need to realize we have commodity prices that are above average, and we need to take advantage of it.