By Jon Scheve, Superior Feed Ingredients, LLC
This week we saw a lot of fireworks with the aggression by Russia into the Ukraine. The question now is: where do prices go? Corn did finish 5 cents higher this Friday than the Friday before it. We are still trending higher for corn and that seems to be a positive.
Fundamentally, nothing has really changed for corn. It is still going to come down to how wet is it going to be in South America in the second growing season for Brazil. That is mainly in April when their crop is made or lost. And, what will it be like in North America during our growing season in July?
Beans have seen almost a $1.90 per bushel drop in over 24 hours. Fundamentally what had changed? Brazil is short beans. Argentina is short beans. Paraguay is short beans. The world at best is short 800 million bushels and there are estimates that the world is short 1.4 billion bushels in the growing year this year. The U.S. only has 200 million bushels left in reserve and we are the only supply left out there.
If the market decides it needs to replace those 800 million bushels, there are only 200 million bushels left in the U.S. The way to ration demand is to raise prices. Maybe $17.50 rations that demand off. But is $15.80 a level that is going to continue to ration demand? It is debatable. The price is still above where it was on Feb. 15.
We’ll see what the demand structure is like. It is obviously going to be a volatile time moving forward and will be interesting to see how this plays out.
Please email email@example.com with any questions or to learn more. Jon grew up raising corn and soybeans on a farm near Beatrice, NE. Upon graduation from The University of Nebraska in Lincoln, he became a grain merchandiser and has been trading corn, soybeans and other grains for the last 18 years, building relationships with end-users in the process. After successfully marketing his father’s grain and getting his MBA, 10 years ago he started helping farmer clients market their grain based upon his principals of farmer education, reducing risk, understanding storage potential and using basis strategy to maximize individual farm operation profits. A big believer in farmer education of futures trading, Jon writes a weekly commentary to farmers interested in learning more and growing their farm operations.
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