Closing Market Comments February 15, 2022
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Today’s Prices
Grain markets finished sharply lower today as there appears to be a de-escalation in the conflict between Russia and Ukraine
Grain Market News
Brazil Soybean Harvest
A typical soybean harvest in Brazil, last week was recorded at 17% and this week at 25% complete, well above the grey line which is last year and well above average. The soybean harvest is advancing ahead of pace or ahead or normal in Brazil. With this pace in mind, we can expect harvest will be about 35% complete by next week.
Brazil 1st Corn Harvest
Last week at 27% compete and this week reported at 33% complete again above average and above the last few years. At this pace next week, the Brazilian corn crop could be about 40% complete. Keep in mind this is the first crop in corn which only accounts for 25% of Brazil’s corn crop. The other 75% is the suprema corn crop which is planted following the soybean harvest which is taking place right now.
Seasonal Brazil Corn Exports (Mar-Feb)
This chart shows the seasonal exports for corn coming out of Brazil. Ost of their corn is shipped between the July and December timeframe. By the time you get to January and February typically Brazil is starting to run low on corn and the estimate based on ship line up is that Brazil is pretty much done shipping corn earlier than normal because of the losses of the suprema crop last year. In addition to near 0 corn exports out of Brazil in February, March-June typically have about 0 and since Brazil is nearly out of stock already, Brazil will not be competing with exports for corn for the next 4-4.5 months. This will open the door for near record large US corn exports over the next 4-5 months.
South America 2-Week Precipitation Forecast
South America weather is still indicting dryer than desired conditions for southern Brazil and Argentina the first week but improving rainfall is expected in the late February timeframe. Days 9, 10, and forward we can see some improved weather. But by that time more crops will be becoming mature and there is less time for South American crops to improve.
Temperature Anomaly
In addition to another 8-9 days of dryness we can see another 8-9 days of heat in Argentina, Paraguay, Uruguay, and Southern Brazil. So, additional crop stress and additional crop losses are still possible. Our thoughts at Heartland Farm are that the crop in South America may not be declining as quickly as they were in the month of January, but they still are not improving and likely will decline slightly as we go forward. Massive crop losses have occurred for both corn and soybean in South America.
2021/22 Crop Ratings in Argentina
Looking at the calendar on the left, we can see when rain fell in the last half of January, conditions improved from 31% good/excellent for beans to 37-38%. Now they have stabilized and could slip a little lower over the next week or two. In early December conditions were 88% good/excellent versus now over the last 5 weeks in the 30% range. Looking at Argentina’s corn condition ratings they were 90% good/excellent rating in early December and dropped down to 22% in mid-January. Then some rain from the last half of January allowed conditions to improve to 32% good/excellent but now they started to dip lower as dryness is starting to expand, and that dryness could last another 7-10 days. The rains that fell in the last half of January were certainly helpful but the crop in South America is not getting bigger and will likely shrink a little more according to our current estimates.
Grain Market News
NOPA Soybean Crush
NOPA came in at 182.2 million bushels, which was somewhat disappointing, the market thought it would be above last year and a record level but came in a little below. Our year-to-date crush after 5 months of NOPA numbers is down 1-1%, USDA is estimating by the year end our crush will be up 3.5%. We believe that number will be reached and exceeded because last year’s crush was extremely low in the last half of the year due to soybean supplies running out. This year’s crush is likely to be at record levels in the last 4-5 months of the marketing year. That will allow us to not only catch up but exceed last years crush level
Cash Grain Prices: Western Kansas
One item that can affect corn demand is how much wheat is being fed. Last year when corn prices exploded to the upside wheat was cheaper than corn in the February-august timeframe. That allowed a lot more wheat feeding. Currently wheat prices are much above the price of corn and that will likely reduce the amount of wheat feeding and that is one factor that will keep the corn demand strong from the seed sector.
March Corn Chart
Today’s March corn chart corn prices had a big down day, the short term may be turning to the downside based on today’s performance, technical indicators turned down as well. The long-term trend continues to be an uptrend and the intermediate trend is a consistent uptrend as well. It’s very possible that corn may want to push lower towards chart support at the 6.20-6.25 range. But the Russia situation with Ukraine will likely be the determine factor as to whether corn will correct further down towards chart support or is we explode to the upside on a Russian invasion of Ukraine. Short term it does look like we could have further correction to the downside, but the long term and the intermediate are still pointed upward on a tightening US and global situation.
March Soybean Chart
Soybeans prices have also turned lower in the short term, but the long-term trend is up, the intermediate trend is up, and that’s based on a tight global and US fundamental, that won’t change, therefore the long-term trend is likely to remain up even if we do have a further correction down into the 15.20-15.25 range. Although the chart looks like it’s turning down and the technical indicators are turning down, if Russia invades Ukraine, all the grain markets as well as energies would likely shoot to the upside and possibly post new highs. Therefore, the chart and technical picture could be reversed at any time if Russia invades Ukraine
March KC Wheat Chart
Wheat prices turned sharply lower today and it was enough to hook our technical indicators. So, there is additional room to move lower if we can break chart support where our 10-, 20-, and 40-day moving average all converge near todays close. The chart support comes in around 7.75, about 30 cents below todays close, but we must keep in mind that if Russia invade Ukraine wheat prices would likely shoot to the upside.
Questions or Comments
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HEARTLAND FARM PARTNERS
5925 N. 28th St. Suite 101
Lincoln, NE 68504877-577-2771