The old saying is that “even a blind hog finds an acorn once in a while.” This morning I am thinking that there is always a good piece of news if you look hard enough. This morning, the good news is that wheat is getting out of Ukraine. Of course, that is only good news for Ukrainian farmers!
Remember a few months ago when the Russians refused to agree to renew the Black Sea Agreement that guaranteed safe passage to ships leaving Ukrainian ports? The thinking then was that this would end grain shipments by sea and force export through other countries by rain, cutting the value to the farmers.
Remember, farmers buy everything retail and sell everything wholesale. And, they pay the freight both ways. The surprise is that after the agreement lapsed, exporting interests declared a passageway they dubbed the “humanitarian corridor.” It was not known if the Russians would actively interfere with this passage, but now we know that they haven’t, so far.
There have been 151 ships that have carried grain out of Ukraine since August. Good news for their farmers, but ours are seeing price drops in wheat as a result. We are — as of the morning of Nov. 17 — seeing December Chicago wheat futures at $5.50 1/4, down three and a quarter cents. A farmer told me last week that he would remember turning down $8 for wheat for a long time.
December Chicago wheat futures lost 25 cents last week, and Ukraine trading is as good a reason as any for the losses. Lack of export demand, which can often be a euphemism for our uncompetitive prices, is another reason. The Kansas City hard red winter wheat futures have traded to new lows.
Soybean prices have been positive most days recently. They have been very volatile, with big ranges on days with interesting rumors or news. We are currently (as of 8:15 a.m. the morning of Nov. 17) trading January futures at $13.32 1/2, down seven and three-quarters cents. If there is good news, it is that prices were six cents lower overnight.
Soybeans had been up, as news of dry weather problems in South America and the idea that Argentine beans would stay home to be crushed after a poor crop last year, helped prices. We actually gained over $1.28 between the $12.70 1/4 of Oct. 12 and the $13.98 1/2 of Nov. 15.
Corn has been the consistently weak commodity. We are currently trading December futures at $4.71 3/4, down three cents on the day so far. The recent low was $4.61 Nov. 13, but we jumped almost 20 cents by the high of Nov. 15, at $4.80 1/2. The problem is, even with our high yields, that is not a good price compared to the costs of inputs when we planted the crop.
The good news of corn is that exports have been good. Last week, we booked 1.8 MMT, a six-week high. That is above estimates, but it has not moved the markets much. Mexico, which we tend to forget with our obsession on China, was once again the biggest buyer.
We have corn exports 33% above last year at this time, but the market is not reacting. There is news out there that could help the market, but it hasn’t yet.
The last Cattle on Feed report said that numbers were 1.8% above last year. That should represent more demand for corn at some time. However, the negative that seems to have the biggest impact on the market is that Brazil is finally ahead
of normal planting time for their corn. They are now 76% planted, and last year at this time, they were only at 70%.
Still affecting the market is the fact that some bean planting was delayed, and the hope here is that the late start means fewer cerrado (second crop) corn will be planted because of the bean-planting delay.
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