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By Jon Scheve, Superior Feed Ingredients, LLC
Corn and beans finished the week at the same price level as one week ago. With harvest in full swing and no significant weather issues forecasted that would slow progress, this seems to be a positive sign for prices moving forward.
However, there are still a lot of unknowns in the market that need to get answered before we have a better sense of upcoming price direction and ranges.
Yields
The biggest unknown is what the national average yield will be. The market will have a better idea Wednesday when the USDA publishes their updated supply and demand estimates. Currently there is a wide range of guesses for both crops, so depending on what is published, there could be big price adjustments.
Ukraine
It is uncertain if the current export corridor program that allows grain to be shipped out of the Black Sea will be renewed in November.
Mississippi River
The Mississippi River water levels are so low that shipping grain by barge has been significantly reduced, right when bean export pace should be ramping up. This has put significant pressure on basis values near the river and increased the carry in the bean market. Plus, weather forecasts for the next few weeks do not show any immediate relief for the situation. This could reduce total bean and corn exports long term and keep prices suppressed.
La Niña
South America’s planting season has started, so the market will start focusing more on weather conditions in the Southern Hemisphere moving forward. The market seems to be trading normal yield and weather conditions.
Bottomline
This week’s USDA report could move prices substantially if yield estimates are changed. Longer term events surrounding Ukraine could impact demand, while South America’s weather will increasingly be a factor for the market.
Please email jon@superiorfeed.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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