Grain Update

Mark White Grain Division Manager

The past 6 to 8 weeks the grain markets have given us indications that the price bubble may have broken, and we are headed lower. Old crop beans have been the leader in this as the front month contract has lost almost 1.50 from the winter high. Lower production from Argentina offered support for a while as the Brazilian harvest was slow to start due to wet weather. Now Brazil is pushing beans out of their ports fast and furious which is leaving the US in the dust as our beans have been overpriced. That has led to rumors that Brazilian beans are headed to our southeastern shores. That has stifled our bean market in the last 10 days. New crop beans have also lost over a dollar in the last month. For some time, we were pricing local new crop beans at 13.00 plus, now it is 12.00 plus and at times it is below 12.00. The USDA releases their planting intention report on March 31. Most of the talk has been on the amount of corn that will be planted, while most traders expect bean acres to remain mostly steady with last year. Once this report is behind us, we will start trading US weather. March has been wet and cold thru most of the corn belt. Very little field work has been done and it will be a full pressure event once we get started. The northern plains still have a lot of snow and that leads to talk of prevented planting for spring wheat and possibly some corn acres. Individual yield history will determine if producers take the money, or switch crops. The high cost of inputs will enter into this decision as well. While the bean market as been on a sinking ship, corn has also struggled to hold value. Old crop did take a 50cent hit as the export market continued to disappoint everyone. Finally, about 2 weeks ago China did come calling and started buying US corn which put some money back into the market. It appears they will continue buying from the US as we have the cheapest corn available in the world at this time. The Black Sea market has been hit and miss while the first crop corn out of South America is about gone. Brazil’s second crop corn was planted late putting it in danger of losses to their hot and dry summer weather. If they do suffer losses on that crop, it will almost force the world buyers to us. Corn planting in the Ukraine is expected to be greatly reduced as the cost of their inputs are tremendously high. Therefore, many Ukrainian farmers are expected to plant more oil crops like sunflowers and canola, if they can plant at all while the war is taking place in the backyards of many producers in that country. The trade is expecting to see an increase in US corn acres when the acreage report comes out on the 31st. Raising corn still looks to be more profitable for many farmers compared to beans. However, current new crop prices for corn when pitted against the high cost of inputs may lead to more head scratching for those that don’t nave their nitrogen on. The cost of interest will take a much bigger bit out of the bottom line for those having to borrow operating money. Many of the decisions that are made in the upcoming season will help set the stage for the near future. We may not have the higher commodity prices going forward that we have seen for almost 3 years. The bubble may not completely burst, but there is little doubt that it will leak some air.