Play Turner’s Take Ag Marketing Podcast Episode 299
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Lots of news and information to go over this week. We talk macro markets and trends but then focus on the CONAB surprise and what it means for grain and oil seed prices for 2021/22 and the 2022/23 marketing years. Make sure you take a listen to this week’s Turner’s Take Podcast!
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CONAB SOYBEAN ESTIMATES
CONAB shocked the oilseed market and cut production down to 125.5 MMTs. The table below is from our team in Brazil. It is in Portuguese but the six rows are for Acres, Yield, Production, Domestic Use, Exports, and Ending Stocks. Yields were reduced 12.5% and that took production from 140 to 125 MMTs. Exports were lowered by 9 MMTs and results in minimal ending stocks for Brazil. The big question for me is where does the lost 325mm bushels of export demand go if not Brazil? I’m guessing at least 200mm comes back to the US.
Global stocks or soybeans and oilseeds are tight. S. American production losses could shift enough export demand to the US that results in minimum pipeline ending stocks. The US needs 90mm+ acres of soybeans and a trendline yield or better to build up very tight stocks levels for 2022/23. I still like buying call spreads and selling put spreads for both old crop and new crop soybeans.
Below are the drought monitors for the US and Canada. The US western corn belt (WCB) is dry and need precipitation. The SW needs it the most. Canada is also dry from Saskatoon to Calgary/Edmonton. This year we need as much US (corn, soybeans, wheat) and Canadian (canola, wheat) acres and production as possible. There is still a lot of time for conditions to improve but things are not off to a great start. Prices for corn, wheat, soybeans, and canola will most likely remain elevated until more is known about N. American acres and yield potential. Given the tight stock levels, drought conditions, and demand levels, our bias is bullish on breaks.
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