By Doug Tenney, Leist Mercantile
Last month Cindy and I were at a local restaurant. I asked, “See anyone you know?” Her response, “I know you.” Since waiting isn’t one of my gifts, she suggested I take a walk among the tables because I always find at least one familiar face. For once I had no success. Here’s hoping your efforts to secure needed workers as well as getting equipment field ready for preparation and planting does not come up as empty.
Grain prices to start the New Year were not friendly as they continued their downward trend and moved even lower for the first month of 2024. In January, corn was down 23 cents, soybeans down 76 cents, and wheat down 33 cents. Fundamentals are sorely lacking at this juncture for 2024 as producers come to grips with a lots of doom and gloom for grains. Money flow, demand, and world grain supplies are the main drivers as we move further into 2024. Commodity funds are holding near record levels of sold corn positions.
U.S. grain export sales at the beginning of February were dismal and disappointing, especially for soybeans when sales on Feb. 1 were just six million bushels and below the low end of trade expectations. Soybean sales were poor due to a cancellation of soybeans previously sold to unknown destinations. Corn sales at 47.5 million bushels were just shy of reaching the high end of trade expectations. U.S. corn export loadings are above those of last year at this same time as corn exports to date for 2023-2024 reached 615 million bushels. Last year was 474 million bushels, for a year to date gain of 29%, Soybean exports to date for this marketing year are slim at 1.016 billion bushels, down 314 million bushels from a year ago, a decline of 11%.
USDA’s crop insurance program will continue its trend of averaging December CBOT corn and November CBOT soybeans during February to determine revenue protection prices for 2024. As of Feb. 2, the average for corn was $4.78, while the average for soybeans was $11.78. Both corn and soybean prices are down sharply from prices for the February 2023 averaging period when corn was $5.91 with soybeans at $13.76.
Ohio’s corn yields in numerous areas were record large, beating previous records by 20 to 60 bushels or more. Those phenomenal yields along with railroad shippers having difficulty in obtaining additional trains as needed to handle the larger harvest, forcing producers to be extremely inventive in securing additional on-farm storage capacity. Basis levels for corn in the final weeks of harvest last fall were easily 30 cents to 40 cents wider than normal as elevator receiving capacity was stretched beyond imagination. Wet holding bins on the farm designed to hold corn for transfer to on-farm dryers, were instead used to store undried corn in order for harvest to be completed. In isolated cases, that wet corn was still there as of Feb. 1. Grain movement to grain facilities before early April has the potential to be larger than normal.
Producers, scrambling to complete farm IRS tax filings due by the end of February, were extremely active in December completing purchases of inputs needed for 2024 corn and soybean plantings. In numerous cases producers were paying interest on unpaid operating lines of credit at the end of 2023 as payment for grain delivered in 2023 was deferred until January 2024.
The mid-January arctic cold blast for Ohio and the Midwest resulted in temperatures below zero with the wind chill factor pushing temperatures even lower. It was not a welcome event for Midwest corn ethanol plants as corn used that week dropped significantly to 81 million bushels. In the preceding 4 to 6 weeks corn used was 104 million to 106 million bushels each week. It served as a vast reminder that equipment does not operate well in that scenario.
While Ground Day earlier this month revealed, in jest, the hope of a short winter in the weeks ahead, forecasts in the days that followed suggested the last half of February could see a return of much colder temperatures and more snow. In addition, the potential of a Nor’easter event along the U.S. east coast in that time period could bring significant snow to several eastern states.
Thought for the day. “Coming together is a beginning, staying together is progress, working together is success.” – Henry Ford.