Play Turner’s Take Ag Marketing Podcast Episode 298
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The Bank of England raised rates this week to 0.50% on a 5-4 vote. The four no votes wanted rates to increase to 0.75%. The EU has changed its tune and is now considering more hawkish monetary policy for 2022. We go over the macro markets, the Feb WASDE, and what we think about wheat, corn and soybeans. Make sure you take a listen to Turner’s Take Podcast!
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The USDA will release their February WASDE on Wednesday, 2/9 at 11am CT. Brazil soybean production estimates range from 126.5 MMT to 137.5 MMT. Brazil corn along with Arg corn and soybeans are all expected to be lower by about 2 MMTs. CONAB will also be updating the market on Brazil crop production next week. Traders are speculating CONAB may get aggressive with production cuts in order to help the government start to determine farmer aid packages.
Below are my estimates for soybeans and what the balance sheet could look like with a 20 MMT loss in South America. It basically puts US Ending Stocks at pipeline minimums for 2021-2022 (old crop) and 2022-2023 (new crop) marketing years. Only 90mm+ acres and a trendline yield or better this summer gets soybeans back to adequate stock levels for 2022-23.
Below are my estimates for corn and I included a scenario of S. America losing 10 MMT of production. Ending stocks at 1.3 and 1.2 billion is bullish but not as bullish as the soybean example. Corn needs 91mm acres and a 180bpa (trendline and record) just to keep pace with demand. Lets hope farmers are able to plant the acres and get the fertilizer to max yields.
Below are my estimates for All Wheat. The US needs 48mm acres and a yield of 49 bpa just to keep stocks about the same levels year-over-year. The US has become the residual supplier of wheat to the world. Profitability per acre has favored corn and soybeans for much of the corn belt since the introduction of RFS. We are finally starting to see trend in increased acres for wheat. This could be the year when acres and a trend line yield can keep ending stocks from going lower year-over-year.
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