Play Turner’s Take Ag Marketing Podcast Episode 289
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I’ve been traveling all week in Canada. It is snowing in Saskatoon so I hope I make my connecting flight in Vancouver. That’s right, the best option for me today was Saskatoon ->Vancouver -> Chicago. Before the pandemic we could fly direct to Saskatchewan but there isn’t enough air travel yet to get those flights back. This podcast was recorded at the hotel so the audio quality is a little off this week. It will be back to our regular production standards once I’m back in the office. We spend most of our time this week on the November WASDE and what we are looking for going forward with corn, wheat, soybeans, canola, soybean oil, natural gas, and crude oil. Make sure you take a listen to this week’s Turner’s Take!
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The November WASDE was supportive for grain and oilseeds. The big concern going into the report was higher soybean ending stocks due to lower export demand. Demand was weaker but the USDA also decreased production a half bushel to 51.2. The result was a moderately bullish surprise and soybean stocks only climbed 20mm bushels to 340 million bushels
Global soybeans stocks were lower but global corn stocks are higher. The market has settled out after the initial report response to the better than expected numbers. Wheat is still tight and will be the leader with corn also a bullish driver. Soybeans are stuck to between a large S. American crop coming in a few months but tight corn and wheat stocks in the US and globally.
Going forward Wheat will stay elevated but the market knows that the world produces wheat for export every few months. The major exporting nations are the US, Canada, Argentina, EU, Ukraine, Russia, and Australia. Argentina and Australia will have week for export in the next month or two. That should help alleviate tight stocks. A good crop in the N. Hemisphere in 2022 could bring stocks back go normal levels. The moral of the story is while wheat is in tight supply now and deserves to be the leader on the board, wheat an also go back to more historical prices quicker than corn and soybeans due to all the wheat that is produced around the world.
I am concerned about new crop soybeans. If S. American has a good crop and we see more N. American soybean acres due to the higher input costs for corn, then soybeans could be $1 to $2 lower this time next year. Farmers need to use rallies to price/hedge 2022 new crop soybeans.
Finally, I do like corn and think $5.50 is a good value area. China is buying corn right now from Ukraine and I personally think that is because they want to avoid reporting how much corn they need. Corn in China is still high and around $9 and $10 per bushel. Corn in the Ukraine is more expensive than US corn but their is no daily reporting system in Ukraine. A shrewd trader would buy the Ukraine corn first and then come to the US and S. America later this year. Corn is adequate to tight with a carryout below 1.5 billion, feed will be strong due to the tightness of feed wheat, and ethanol margins are very positive given the energy situation in the US and globally. When you consider the price of fertilizer and how that impacts margins for corn producers on lower productive ground, we could see lower acres in the US or less fertilizer usage. Either way corn should be supported in the $5.40 to $5.50 area with resistance at $5.85, $6.00 and finally $6.20
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