Mid-June market watching

By Doug Tenney, Leist Mercantile

Producers and traders continue to wonder what is coming down the road with USDA reports. The June USDA WASDE Report was boring as few numbers in the U.S. and world tables were changed. It was puzzling that U.S. old corn exports were lowered 50 million bushels in spite of Census Reports indicating exports are 100 million bushels plus, ahead of weekly grain inspection reports.

Weather continues to be an important puzzle piece for the balance of summer. As we stare at the reality of the July 4 holiday, just days away, three questions remain. First, were weather conditions sufficient from June 10 forward to allow the rest of many acres across Ohio to finally get planted? Second, will weather the second half of June as hot and dry as predicted on June 10 with at least four days of 90-degree temperatures in the upcoming 10-day period? Third, with early July almost here, will a ridge which can block rains from developing, now be in place, only to intensify, and move east as it begins in the western Corn Belt?

Rainfall during May was above normal. Central Ohio had the fourth wettest May in history with some areas receiving at least twice the rainfall compared to normal. Numerous producers across Ohio struggled to complete corn and soybean planting. Some will take prevented planting in their crop insurance coverage for corn, now having the opportunity to complete tiling projects which had been in planning stages for years. Others will plan on keeping the corn inputs already paid for in their hip pockets, knowing that those inputs are significantly cheaper than what can be purchased at today’s prices.

Prevented planting acres in North Dakota, South Dakota, and Minnesota, with frequent rains in April and May which followed two blizzards in April, were expected to be greater than earlier anticipated. This is a year in which every ounce of U.S. corn and soybean production is needed and essential to mitigate what has already been labeled a “food crisis” for many countries around the world. India and Pakistan typically have been exporters of wheat to the tune of 8 million to 10 million tons. A drought will eliminate those exports this year.

November 2022 CBOT soybeans made new contract highs three times from Memorial Day into June 10. Ohio producers had the opportunity to price new crop soybeans for fall delivery at the $15.20 mark or higher. Note that producers across Ohio and the Midwest had already contracted new crop corn and soybean bushels, in some cases months before planting season, average, and even considerably above average proportions of expected corn and soybean production. Much to their chagrin, those contracted prices can be as much as multiple dollars below those levels seen mid-June. Additional frustration becomes apparent as those contacted bushels were completed at then above average prices to provide revenue to pay for record setting input prices.

Inflation and fuel prices continue to be two hot beds of frustration across the country. Producers and truckers continue their tasks in spite of diesel prices which have set multiple record highs in past months. Inflation is exceeding those levels of 40 years ago. You have to wonder if the U.S. population is similar to the crowd awaiting the July 4 fireworks festivities as the crew in the background continues to murmur, “They have no idea at the display of awes and gasps of which they will soon bear witness.”

The U.S. Fed was expected to raise the prime interest by .5% in June and the same is already anticipated for July. Up to two additional hikes are expected the remaining five months of 2022.

If hot and dry conditions take place in the Midwest following the July 4 holiday, December 2022 CBOT corn and November 2022 soybeans could challenge the contract highs in place on June 10. Those were $7.66 ¼ for December corn and $15.84 ¾ for November soybeans.

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