The holiday market doldrums have arrived

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One rarely-broken rule of grain trading is that not much happens in the futures markets in the month between Thanksgiving and Christmas. That will likely be true again this year, especially since the Russians have agreed to extend the Ukraine export shipping agreement for another 120 days.

I suppose we are now expected to see Russia as the good guy, allowing the desperately needed exports while in reality, they continue to use missile strikes against civilian targets to whittle down the will of the Ukrainian people. They will freeze in the dark after the electric infrastructure is destroyed.

Russia, with a record wheat crop and the world’s largest fertilizer production and export, will continue to find buyers for its products. India needs the wheat and fertilizer after its crop last year was decimated by drought. Other nations are glad to buy discounted petroleum products at what are higher than pre-war prices. Regardless of military setback, some aspects of this war are going okay for the Russians.

Transportation issues

For the Americans, the fall crops are in the bins or on trains headed south. Exports from the Gulf have been slowed by the low river levels, and fertilizer suppliers have been fighting high freight rates on the low-draft river to build supplies for spring and maintain supplies for farmers doing as much fall fertilizer application as possible while the fertilizer is available.

The river levels have rebounded from mid-Mississippi on down. The water level at Memphis was reported to be close to unnavigable, as minus 12 feet from normal, but has rebounded quickly to normal levels with recent heavy rains. The northern Mississippi is still low, but is due to close in a few weeks anyway.

The threatened rail strike may still happen, but voting has delayed the possible strike until into December. One small union has not agreed to current terms, and the fear is that all the other unions will not cross picket lines, stopping rail service.

Farmers in the Plains states that are near tracks are reporting heavy traffic of shuttle trains that are building inventories at users in southern states. With the harvest mostly finished, fears of transportation bottlenecks interfering with harvest have gone away.

Now it is a problem for cattle feeders and exporters. They may struggle, but the doldrums of holiday markets will likely continue as normal.

Corn and soybeans

Corn and soybean markets basically reversed themselves from last week as the recent trading ranges were respected. December corn futures gained almost a dime after being lower last week. That move was blunted by the current loss of four and a half cents in early trading the morning of Nov. 21 as this was being written. Remember, we were at $7.061⁄2 a month ago, Oct. 10.

The soybeans, which were higher two weeks ago, lost almost 22 cents last week. We added on another four-and-a-half cent loss the morning of Nov. 21, so that January futures were trading at $6.631⁄4. The soybeans are not directly influenced by the Ukraine war, and are mostly being traded relative to the product markets, soy oil and bean meal.

Look ahead

This is the time of year when we look ahead to the next crop prospects, even while we get serious about selling the current crop. Generalizations can be made. Any way we figure it, the corn supply is going to be tight all year. That should help firm our prices at or above where we are now.

The 2023 crop is another matter. If we raise a big crop, prices have no reason to stay at these levels. The December 2023 futures are right now about 60 cents lower than 2022 December futures. This relationship can get even worse, if the supply tightens, but we have good 2023 crop.

In addition, the weather in South America is improving, and rain there would help their corn exports. Argentina has been especially dry, slowing their planting. They will not plant if the soil is not already moist.

The Brazilian corn planting is actually ahead of normal, and they also have the ability to grow a second crop of corn after soybeans, the “safrina” crop. Recent rains have caused observers to raise Brazilian soybean crop estimates. This means more completion for the export market next year.

This 2022 crop had good news with the release of an export sales number that was the highest for the marketing year, at 111.3 million bushels. More than half was for China. Just last week we were speculating that sales had been slow, but we just more than caught up.

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