Market Outlooks

Farmers Face Budget Squeeze And Balance Sheet Challenges—Echoes Of A Decade Ago

Tue, 30 Dec 2025 21:12:38 GMT

If heading into 2026 feels a little like déjà vu, you’re picking up the same vibes Chris Barron, president and CEO of Iowa-based Ag View Solutions, is experiencing. He believes the next couple of years will echo the last big downturn farmers weathered a decade ago.

“It’s kind of scary that 2025, ’26 and ’27 look essentially like a repeat of 2015, ’16 and ’17,” Barron says. “If you remember that time frame and made it through, buckle down because I think we’re going there again.”

He says one of the clearest signals farmers are about to experience a repeat of a decade ago is based on the 2026 cost-of-production data from Ag View Solutions’ clients, who are based in 23 U.S. states and three Canadian provinces:

Soybeans: About $11.87 per bushel based on a 65-bu. average yield
Corn: About $4.69 per bushel (before basis) on a 223-bu. average, with many growers needing at least $4.85.

Some growers raising non-GMO seed beans or getting premium contracts can still make soybeans compete. But for many farms, soybeans are the weak link in the current economic cycle.

Right now, Ag View Solutions clients are expected to plant roughly 62% of their acres to corn and 38% to soybeans for 2026 — essentially the same as 2025. Barron says he doesn’t expect many acres to shift away from this mix to more soybeans “unless something really changes.”

Given current price relationships and crop insurance guarantees, Ag View Solutions data shows about a $50-per-acre advantage to corn over soybeans for the year ahead. Even if the dollars trend lower, he says corn often pencils out better because of gross revenue and risk management tools.

More Cost Pressures Heading Into 2026

It’s no secret production costs are increasing heading into the next season. Some of the key factors include:

Overhead costs (what Barron calls ‘”return to management”) for family and employee expenses, including phones, fuel and business-paid personal expenses, are up nearly 5%. After the past year or two of what Barron describes as hard belt-tightening, he says deferred spending is “snapping back” at higher levels.

Land rents are holding mostly steady, supported by higher property taxes and outside investor demand.

Interest expense is climbing as operating lines grow.

Fertilizer costs are a mixed bag. On corn, fertilizer costs are up about 7%, even though Barron believes most farms are staying with removal-rate applications. On soybeans, he says fertility costs will be lower, mainly because growers are putting less fertilizer on their bean acres and leaning harder on corn nutrients.

Machinery and equipment costs are also inching higher for the year ahead.

This Is Not A Repeat Of The 1980s

Despite the “red” many farmers will see on their spreadsheets in the year ahead, Barron says the current period is not a repeat of the 1980s farm crisis, for two key reasons:

Farmer equity is strong. Debt-to-asset ratios remain healthy for many U.S. growers, even if cash is tight.
Many farmer exits are voluntary. Today, many farmers are choosing to retire or scale back in order to protect equity.

Barron offers a recent example: “I got a call the other day on 7,000 acres, a 45-year-old farmer saying, ‘I’m not going to do this anymore. I’ve got a $5 million equity position, and I’m not going to go for a couple more years and chew away another million dollars. I’m just going to be done.’”

Strategies for the Current Climate

To survive — and potentially thrive — in this “repeat” cycle, Barron suggests focusing on these four areas in the year ahead:

Do the high-dollar work. Barron says the “$500-an-hour” work is crunching numbers in the farm office. “Know your true costs, stress-test budgets, analyze each profit center. A few hours spent with good numbers can be worth far more than another round in the tractor,” he says.
Protect yield. He advises against cutting seed, chemistry or other inputs that protect or enhance yield “just to save a few cents per bushel.”
Right-size your operation. Barron says some of the most successful turnarounds he’s seen with operations lately have come when farmers “right-sizes” — they’re doing less, but doing it better — instead of trying to be everything to everyone.
Use collaborative models. Barron says he is seeing more farmers share equipment and labor with their neighbors to spread fixed costs without extra capital.

Opportunity Will Still Knock

During a Top Producer podcast, Barron told Host Paul Neiffer that the tight times ahead will create new land-rent opportunities for some farmers who want to expand. What commonly happens when margins get tight is some farmers pull back, and that’s when expansion possibilities open up for others.

“We’ve had numerous clients call us about opportunities to rent land and not like in small amounts. When times are tight and when things aren’t good, that’s when these opportunities present themselves,” he says.

Barron’s message for those farmers in expansion mode: have your numbers, working capital and lender relationships in order now, so if the right block of ground comes available, you can move quickly and confidently on it.

If you’re interested in the ROI spreadsheet Barron’s team uses to analyze market trends, email cbarron@agviewsolutions.com .

Hear the complete discussion between Barron and Flory on Farm Journal TV . Also, you can listen to the Top Producer podcast discussion between Barron and Neiffer at the link below:

Have Grains/Oilseeds Completed Their Reset In Prices?

Wed, 15 May 2024 19:14:02 GMT

About 14 months ago we visited the wheat outlook, and I questioned if wheat could succumb to a total reset, it could happen to any commodity. At that time, based on the leading futures contract, corn was trading near $6.50, soybeans were at $15.50 and Chicago wheat was $7.50. In early 2023 the monthly corn chart showed a long-term risk of $4.50.

As this goes to press, current prices have Chicago wheat at $6.40, reflecting nearly a dollar rally since March 1, but still a far cry from the $13 high in March 2022. May corn is trading at $4.57 finally blowing through the proverbial $4.40 resistance but still down from $8 also of March 2022. Soybeans caught fire on concerns over South America crops, and rallied 90 cents the first four trading days of May.

Did Grains Get Cheap Enough?

If the function of inflation fighting is to reset our economy to more normal, agriculture has paid it dues. Certainly as the price chart below from the Federal Reserve presentation at the 2024 Top Producer Summit shows, the best we could see for 2024 would be a minor profit (soybeans) or a slight loss (corn). Breakeven was the catch phrase that caught my attention.

I made some last-minute changes to my planting mix — pushing more corn to soybeans. I figured why spend $350 more to plant corn to only breakeven? In addition, South America equals or exceeds the U.S. in exports of corn/beans, and at competitive prices as the cash and freight chart (below) shows.

The good news is if they have a bad crop, I benefit price wise. The opposite is true as well, so due diligence and having great info is as important to marketing as the type of seed I plant or what color my machinery is. The only green thing I am concerned about is the cash left in my pocket. As this goes to press soybeans have had a 50 cent rally in new crop ($30/acre). So far it’s a good decision!

Short-Term Outlook

After the three year hiatus of down markets, grains have turned positive at least in the short-term, which is the first element of turning long-term positive.

• Corn is still competitive, and concerns rise for Argentina’s crop being 10 mmt less than the lofty estimates of 60 mmt. The U.S. crop is key; every million acres increased or decreased changes production by 180 million bushels plus or minus. Flooding in Argentina and delayed crops in the U.S. have corn excited as we go to press rallying 22 cents, following soybeans.

• Soybeans feel heavy. Brazilian basis has narrowed but is still more competitive than in the U.S. As China’s economy falters, keep an eye out for purchases from any supplier. Soymeal was touted as an oversupply problem but posted a turnaround in April. Was it due to past problems in Argentina or a precursor of improved demand? The dollar rally in soybeans in early April suggests the market caught on.

• Wheat had a big rally since March 1 and is overbought. A setback can be expected with a continued uptick a surprise. Over the past couple of decades, global production varied from low to high by 130 mmt. Neither Russia nor the European Union have a good crop every year.

Technical analysis is often the first indication of a change coming.

Chip Flory: Think Outside the Box to Build a Better Price

Wed, 10 Apr 2024 19:29:22 GMT

Periods of low-priced markets often demand creative marketing to build a price higher than the cost of production. Re-ownership of cash sales in futures or call options is the most common tactic used to build a price, and some are comfortable using option spreads to add on to a cash selling price. Some of these strategies, however, belong in a speculative trading account rather than your hedge account.

There was a time where providing a unique product for a niche market was a popular way to add value to production. Now sustainable, regenerative and smart-farming practices offer an opportunity to build a price during what looks to be another low-priced period in the grain markets. For example, the Biden administration’s Inflation Reduction Act (IRA) had less to do with reducing inflation and more to do with incentivizing green energy production and emission reductions.

“The President’s IRA of 2022 makes the single largest investment in climate and energy in American history,” says the U.S. Department of Energy.

Money allocated to climate-smart incentives via the IRA has been spent; it just hasn’t been delivered. And it will be delivered. Manufacturers of solar panels, energy innovators and farmers are on the list of likely recipients.

One of those efforts is the Section 45Z Clean Fuel Production Credit. This tax credit is designed to incentivize production of clean transportation fuels. At present, the focus is on ethanol-to-jet. Giving corn-based ethanol a pathway into sustainable aviation fuel (SAF) production has incentivized projects such as a massive, and controversial, CO2 pipeline and paying corn producers for using low-carbon production practices.

Establish a carbon intensity score
That’s where your carbon intensity (CI) score comes into play. The earliest carbon sequestration efforts focused on changing production practices to lock up carbon. These programs failed to reward producers already using the practices they were attempting to encourage.

Section 45Z credits might be available to producers with a history of climate-smart production methods such as cover crops, no-till and some precision ag practices. Established farming practices are evaluated in calculating a CI score, and ethanol plants should be willing to pay more for corn produced with a low CI score in order to participate in the high-value SAF market.

It’s a three-year tax credit available through the 2027 crop year, but establishing your CI score starts with the 2024 crop. It’s about documenting production practices. It’s about working with other producers to feed corn into an ethanol plant that has a low enough CI score to make the ethanol produced at the plant eligible for SAF credits. It’s about documenting what you already do to potentially build a better price during what looks to be another period of low crop prices.

Numbers of Note for 2024/25 Corn and Soybeans

Tue, 05 Mar 2024 22:10:19 GMT

USDA’s Annual Ag Outlook Forum delivered the first unofficial look at the 2024/25 marketing year for grains and oilseeds. The next update will come in the May World Ag Supply and Demand Estimates.

Between now and then, USDA’s Prospective Plantings Report on March 28 will update 2024 U.S. acres. We will gain a much better understanding of South American production, which will allow fine-tuning of demand estimates. U.S. weather trends and the start of planting in the Midwest will also help determine if trend-line yield projections are realistic.

But until that May report, here are the dominant themes impacting the corn and soybean markets.

Corn plantings are projected at 91 million with soybean plantings at 87.5 million acres. That’s 178.5 million acres combined, compared to last year’s 178.2 million. Corn acres are down 3.6 million with soybean acres up 3.9 million from 2023. Corn got a head start last fall, and 92 million is likely a foundation for 2024 acres, especially if this planting season starts early.

The national average corn yield is projected at 181 bu. per acre. That’s an adjusted trend-line yield and is down from the 181.5 bu. projected at the 2023 Ag Outlook Forum. The projection includes the assumption of normal weather conditions for spring planting and summer crop development. Yield reached a record 177.3 bu. per acre in 2023 with some difficult conditions in the western 50% of the Corn Belt. “Normal weather” might be all it takes to launch yields well past trend line.

The national average soybean yield is projected at 52 bu. per acre.

The projected total supplies from 2024/25 are 17.24 billion bushels of corn and 4.84 billion bushels of soybeans. The market’s job is to find a way to use as many of those bushels as possible. Unfortunately, that will be a weight on prices.

Corn ending stocks for 2024/25 are projected at 2.53 billion bushels, with soybeans at 435 million bushels. Corn stocks-to-use would be 17.2% and soybeans 9.9%. Neither stocks-to-use ratio is price friendly. USDA projected the 2024 national average corn price of $4.40 with soybeans at $11.20.

Longer-Term Forecast

2024/25 carryovers will become 2025/26 beginning stocks and old-crop bushels carried into a new-crop marketing year are a supply-side cushion. Corn beginning stocks might represent as much as 15% of the expected 2025 corn crop, while soybean beginning stocks could be as much as 10% of the expected soybean crop. It seems beginning stocks are snowballing, making the market less sensitive to crop threats.

A short-crop in the U.S. is the most likely “quick fix” for the situation, but if Brazil’s crop problems do turn into more demand for U.S. corn and soybeans by early summer, risks to 2024 crops will be back on traders’ must-watch list.

Top Producer's 2024 Bear-Bull Market Outlook

Fri, 19 Jan 2024 20:18:00 GMT

Here are the analysts’ outlooks for the commodity markets in 2024. Click through to read more from each analyst.

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Dan Basse says, “Importantly, managed money is sitting on their largest net short CBOT grain position in four years.”

Naomi Blohm: Soybeans Could Find New Country For Demand

Naomi Blohm says, “The U.S. soybean story remains quite friendly to start 2024 with historically small ending stocks and strong crush demand.”

Peter Meyer: 2024 ‘The Year of Demand’

Peter Meyer says, “Both the corn and soybean markets will need to take their lead from changes in both global and domestic demand given the production shortfall stories have become stale.”

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Chip Nellinger says, “Producers should be prepared to be more aggressive than years past in protecting downside price risk.”

Mike North: Markets To Stay In the Doldrums

“Near term, the soybean market has a loftier perch with a tight balance sheet emerging from supply headwinds,” says Mike North.

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

“It’s difficult to find anything bullish to say about corn for 2024.” says Jon Scheve.

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Angie Setzer says, “With their new trade agreement with Brazil, China is likely to import less corn from the U.S. in 2023.”

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Fri, 19 Jan 2024 14:56:21 GMT

From Dan Basse, AgResource Company President:

Bearish grain prices prevailed in 2023 and will carry forward to early 2024, but one must be careful about becoming too bearish. World exporter grain stock/use ratios are historically tight, and outside of large U.S. corn stocks, the world does not sit on an overabundance of grain. Brazilian corn and soybean crops will not reach their full potential due to a nasty drought across Mato Grosso while Chinese imports of world corn and soybeans are record or near record large. And the value of the U.S. dollar will erode based on $34 trillion of U.S. debt and a U.S. political system that is polarized and damaging foreign investor confidence.

Importantly, managed money is sitting on their largest net short CBOT grain position in four years, which produces considerable upside potential amid any adverse weather that strikes across the Northern Hemisphere next spring. A bullseye for a summer drought is the Black Sea as Russia is unlikely to produce three consecutive record or near record large wheat crops. World weather risks stay elevated into 2025 with the development of a new La Niña phase of equatorial ocean temperatures. The CBOT risk is to the upside following a mid-winter low. CBOT volatility is forecast to be sizable during 2024, and farmers should be prepared to harvest the abrupt and sizable price swings.

More Outlooks:

Naomi Blohm : Soybeans Could Find New Country For Demand

Peter Meyer: 2024 ‘The Year of Demand’

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Mike North: Markets To Stay In the Doldrums

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Naomi Blohm: Soybeans Could Find New Country For Demand

Fri, 19 Jan 2024 14:56:04 GMT

From Naomi Blohm, Senior Market Adviser, Total Farm Marketing:

The reality of 2-billion-bushel carryout in the U.S. will weigh on corn prices in 2024. In order for corn futures prices to trade above $5, three things need to occur: stronger than expected U.S. export demand, a 25% reduction in the Brazil safrinha crop, and a drought in the U.S. during the summer ahead.

The U.S. soybean story remains quite friendly to start 2024 with historically small ending stocks and strong crush demand. However, the South American crop is deemed “big enough” to feed global demand for soybeans and continues to lend to higher global carryout, which will keep rallies in check. Unless the Brazil soybean crop becomes smaller than 145 mmt, it might be a struggle to see soybean prices have reason to rally over $13.50 in the coming year. Keep an eye on potential new demand from India.

More Outlooks:

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Peter Meyer: 2024 ‘The Year of Demand’

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Mike North: Markets To Stay In the Doldrums

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Peter Meyer: 2024 'The Year of Demand'

Fri, 19 Jan 2024 14:55:56 GMT

From Peter J. Meyer, Principal/Crops Economist, Muddy Boots Ag

This year is setting up as the year of demand. After multiple years of supply interruptions, caused by adverse weather conditions globally and the war in Ukraine, both the corn and soybean markets will need to take their lead from changes in both global and domestic demand given the production shortfall stories have become stale. Additionally, the markets will likely not benefit from fund interest as the U.S. Federal Reserve appears to have inflation under control. Even a declining dollar will solicit a muted response from so-called fast money given the inflation situation.

Persistent Bearish Undertones

Regardless of possible production shortfalls in Brazil, that country has now surpassed the U.S. in global corn and soybean exports, a trend likely to continue for the foreseeable future. Argentina’s change in government could result in a more aggressive position in world export markets as well, while China’s birthrate continues to shrink. Domestically, all demand eyes remain on renewable fuels such as Renewable Diesel (RD) and especially Sustainable Aviation Fuel (SAF) as increased soy crush capacity matures during the year while fuel producer tax credits in the Inflation Reduction Act (IRA) come to fruition. Focus on carbon intensity scores (CI) will likely fall to the farm level as end users continue to search for ways to lower their carbon footprints.

Volatility might ramp up later in 2024 as the presidential election nears, although neither party currently enjoys a cordial relationship with China, a country U.S. exporters have come to rely on. Overall, a slightly bearish tone will likely continue throughout the calendar year.

More Outlooks:

Naomi Blohm: Soybeans Could Find New Country For Demand

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Mike North: Markets To Stay In the Doldrums

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Fri, 19 Jan 2024 14:55:47 GMT

From Chip Nellinger, owner, Blue Reef Agri-Marketing

It is difficult to be extremely bullish on corn, but with prices sitting at multiyear lows just under $4.60 on March futures and right at $4.92 on December futures, it is hard to believe there won’t be at least one perceived threat to production in the coming months to give us a bounce to much better levels than what are currently offered. Before even talking about production prospects in the U.S. this coming spring and summer, it appears the corn market is giving virtually zero thought to the upcoming Brazilian safrinha corn crop. After a historic drought in Brazil earlier this year, the market seems to think everything is magically better now that there have been a few rains across the country. In reality, much uncertainty remains as to both the economics of planting corn in Brazil as well as whether the drought conditions have truly been broken or just delayed. Also, a lot of unknowns exist about the upcoming U.S. growing season, where many areas of the western Corn Belt remain with extremely dry conditions. Rallies should be achievable, but producers should be prepared to be more aggressive than years past in protecting downside price risk.

Soybeans are sitting at multimonth lows having just dropped $1.60 off November highs. There appears to be no attention given to the 700+ million-bushel variance in recent private estimates of the Brazilian crop size. With recent rains across many of the dry areas there, the market seems to have waived the “all clear, crop is saved” flag. This might be a wildly premature assumption. The soybean market has a recent history of multiple $1.50 to $2+ swings both ways. Prices are currently undervalued and rallies back to $13.20 on old crop contracts and $12.70 on November beans, at minimum, are realistic.

More Outlooks:

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Naomi Blohm: Soybeans Could Find New Country For Demand

Peter Meyer: 2024 ‘The Year of Demand’

Mike North: Markets To Stay In the Doldrums

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Mike North: Markets To Stay In the Doldrums

Fri, 19 Jan 2024 14:55:40 GMT

From Mike North, President, Ever.Ag Producer Division

Corn and soybean markets could remain in the doldrums in 2024. Near term, the soybean market has a loftier perch with a tight balance sheet emerging from supply headwinds. Drought in Argentina cut into global supply. However, this year, Argentina’s favorable growing weather has ended a drought and will sharply increase production. Also, a new president is supporting economic initiatives that will encourage world trade. These factors will put pressure on the bean market.

The other reason to be bearish in soybeans is USDA’s projected growth of year-over-year global demand set at 5.4% versus a five-year average of 1.5%. This is likely overestimated; USDA needs to trim its estimate in 2024.
China, our biggest soybean buyer, has a soft economic outlook. This broadens concerns for the soybean market.

The signal in the market is for U.S. farmers to plant more soybeans, which could mean 3 to 4 million more soybean acres than a year ago. This would add downward pressure on the market.

Corn Price Pressure

If the soybean market starts to fall as more supply comes out of South America, the corn market will get dragged down with it. Corn doesn’t need additional pressure, when you consider its already big balance sheet.

Historically, a 15% stocks-to-use ratio means a market with a $4 handle or below. Currently, with a $5 new-crop price and a 15% stocks-to-use ratio, there’s a lot of risk on the table.
More competition is anticipated. USDA pegs Argentina’s corn production at 55 mmt for 2023/24, up from last year’s estimate of 34 mmt.

More Outlooks:

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Naomi Blohm: Soybeans Could Find New Country For Demand

Peter Meyer: 2024 ‘The Year of Demand’

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

Fri, 19 Jan 2024 14:55:33 GMT

From Jon Scheve, President of Grain Trading, Superior Feed Ingredients

It’s difficult to find anything bullish to say about corn for 2024. A 2-billion-bushel carryout is just too big for the market to grind through over the next year. However, that doesn’t mean the market will go straight down. I expect seasonal rallies once planting is over and the weather risk begins throughout the summer.

I don’t think the number of corn acres will be reduced substantially next year. Therefore, for the market to rally more than 50¢ from current values, there will need to be a significant weather issue in Mato Grosso, Brazil during April or May, or in Iowa and Illinois next July. On a positive note, I doubt prices will drop substantially until almost fall.

Numerous Influences on Soybeans

The soybean market is more complicated because South America grows about 65% of the world’s soybeans. That means weather there affects the market more than the
weather in the U.S.

The biofuel mandate will keep upward movement potential in the market for the next few years. However, the plants are coming online gradually, so it is unlikely prices will increase substantially from this demand alone. I doubt planted soybean acres will increase much this spring in the U.S., which should keep stocks at an adequate level.
The big unknown will always be how much China decides to purchase and how much is available in South America.

Soybeans could easily move up or down $2 per bushel this next year, but it depends on the weather on two different continents over the next year.

More Outlooks:

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Naomi Blohm: Soybeans Could Find New Country For Demand

Peter Meyer: 2024 ‘The Year of Demand’

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Mike North: Markets To Stay In the Doldrums

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Angie Setzer: This Year Will Underscore The Importance Of Your Marketing Plan

Fri, 19 Jan 2024 12:00:00 GMT

2024 will reinforce the importance of having a plan in your grain marketing. The past couple of years have been volatile, but pricing opportunities were plentiful; this year we are likely to see more in the way of a rangebound trade punctuated by an occasional spike in price.

Back to ‘Old Normal’ Buying Habits

The entire market structure is different this year as end users, both domestically and around the world, have returned to “just in time” buying. While we have been seeing logistical constraints, supplies remain somewhat plentiful while demand has been rationed from the recent run of high prices.

The lackluster supply and demand dynamics combined with the speculator transitioning from buying to selling has the market starting the year under pressure. However, with the recent market strength so fresh in the minds of many, and the ever-present threat of China returning to the market as a buyer, I feel we will be able to find and maintain support well into the growing season.

In grains, I am watching Brazil’s second crop corn production, Black Sea production and exports, Chinese demand and domestic demand here in the U.S. In soybeans, it is great we have seen the surge in domestic crush demand that we have, with continued expectations of demand growth in that sector keeping support under the market. Soybean exports will likely continue to disappoint though as Chinese margins remain depressed and downstream demand remains poor.

More Outlooks:

Dan Basse: Prepare For Abrupt And Sizable Price Swings in 2024

Naomi Blohm: Soybeans Could Find New Country For Demand

Chip Nellinger: There Will Be At Least One Perceived Threat to Production

Mike North: Markets To Stay In the Doldrums

Jon Scheve: Expect To See Seasonal Rallies and Weather Risk

What Impact Will Inflation and the Global Economic Slowdown Have on Grain Markets in 2024?

Tue, 16 Jan 2024 04:42:48 GMT

The World Bank is projecting the global economy will expand just 2.4% this year, down from 2.6% in 2023. The slowdown is due in part to higher interest rates in an effort to curb inflation. Leading ag economists at the Water Street Solutions Edge Conference in Tucson, Arizona say this will impact agriculture in 2024.

They expect inflation to return in 2024 and that will not only have an impact on the interest rate environment, but it could bring the fund or speculative community back in to buy commodities. And that would be positive for the grain markets.

Inflation cooled in 2023 to a low of 3.1% for November, following hikes by the Fed that put interest rates at a 22-year high of 5.25 to 5.5%. However, the December Consumer Price Index showed inflation rose to 3.4%.

Arlan Suderman, Chief Commodities Economist, StoneX, says there are other economic signs inflation is returning. “With the economy kind of getting its footing underneath it again, that’s just going to encourage more buying of goods and services, which tends to inflate wages again as well and the other shelter.”

So, despite the markets pricing in lower interest rates, he doesn’t expect the Fed to make that move, at least in early 2024.

Suderman says, “I believe that means higher for longer from the Federal Reserve, but I believe the Federal Reserve starts to lose its influence on interest rates this year, particularly the longer end of the yield curve, as we see what’s projected to be a 23% increase in debt certificates that are offered onto the Treasury market because of government spending.”

That means the Fed won’t be able to raise interest rates to effectively curb inflation. Plus, Dr. David Kohl, Professor Emeritus, Ag and Applied Economics, Virginia Tech says the Fed doesn’t want a repeat of the 1980s, so he thinks the market is getting ahead of itself. “They don’t realize that the Fed was late to tackle inflation and they don’t want to, you know, do a strategy to bring it back. And so they’re going to, the Federal Reserve’s going to be very, very cautious.”

This setup could cause the funds to buy commodities as a hedge against inflation, after being in a deflation mode for the last 21 months and short in many markets like corn and wheat according to Darren Frye, CEO, Water Street Solutions: “Well they have a tendency once they come out of something they go the other way. I think we could have a catalyst to get them flat. And then we’d see if there’s something optimistic enough to get them long. 7:09 But we might find out that we have another surge in inflation and that would be bullish to commodities if that happened.”

Suderman adds, “We’ve seen a strong correlation in price action of money coming into the commodities which tends to affect prices in years when the main management is worried about rising inflation.”

And that fund buying could support grain prices later in the year, which would be welcome news for farmers like Danny Leifker, who farms in Southwest Wisconsin and Northwest Illinois. “We’ve been in a bear market here for about a year and a half and so we need some sort of spark to get the grain markets to move higher and hopefully that inflation part of it can do that.”

Suderman says, “That doesn’t necessarily mean we get a big rally in prices. But it does make it easier for the market to respond to any type of a friendly story that comes along.”

Kohl says the headwind for those grain rallies may be global demand. China’s growth rate was 5.2% in 2023, which cut U.S. exports by 40%. The World Bank projects China’s growth at 4.5% this year, the slowest in 30 years. “One in five dollars of net farm income comes from export markets and as we look at this global economy, we’re in a global economic slowdown. Number one China because of its demographic issues and also because of the exports being down to China not only around the world but to the United States and Europe, along with the European economy kind of being in recessional times.”

At the same time South America’s agricultural production is expanding. So, Kohl says the U.S. is becoming a secondary provider. Those export customers are also going away from the U.S. dollar and creating their own currency. “In other words, Asia and China, they’re going to go to the Southern Hemisphere whether its Brazil or New Zealand, Australia, etc. they’ll go there first. Now if they can’t supply them then they’ll come to the United States.”

As a result, he says farmers will see tighter margins and need to globalize and future proof their operations. Kohl says, “You keep your business very financially liquid with working capital, keep your cash, keep your options open.”

Farmers attending the conference say they are taking all this advice to heart and integrating into their marketing and financial plans for 2024. Leifker says, “The last couple of years from a profitability standpoint it’s been relatively easy just because whatever price the grain was at was a profit but this year it’s going to be a situation where you know if you see profit you better grab it.”

Will Inflation Return in 2024 and What Does It Mean for the Grain Markets?

Wed, 10 Jan 2024 21:16:14 GMT

Speakers at the Water Street Solutions Edge Conference in Tucson, Ariz., say they expect inflation to return in 2024. Not only will it have an impact on the interest rate environment, but it could bring the fund or speculative community back in to buy commodities, which would be positive for the grain markets.

Inflation cooled in 2023 following a series of interest rate hikes by the Fed. However, Arlan Suderman, chief commodities economist for StoneX, says there are already economic signs inflation could rear its ugly head in 2024.

“With interest rates coming down, we’ve seen a resurgence in interest in buying houses once again at lower mortgage rates,” he says. “Those are two sticky areas of inflation that can bring it back.”

Despite the markets pricing in lower interest rates this year, he doesn’t expect the Fed will cut rates, at least in early 2024.

“I believe that means higher for longer from the Federal Reserve, but the Federal Reserve will start to lose its influence on interest rates this year, particularly the longer end of the yield curve, as we see what’s projected to be a 23% increase in debt certificates offered onto the Treasury market because of government spending,” Suderman says.

That means the Fed most likely won’t be able to use interest rate hikes to curb inflation. That could cause the funds to buy commodities as a hedge against inflation, after being in a deflation mode for the last 21 months and short in many markets such as corn and wheat.

Darren Frye, CEO, Water Street Solutions, says: “The Fed has a tendency once they come out of something they go the other way. I think we could have a catalyst to get them flat and then we’d see if there’s something optimistic enough to get them long. But we might find out we have another surge in inflation and that would be bullish to commodities if that happened.”

Suderman adds that could support grain prices. “That doesn’t necessarily mean we get a big rally in prices, bit it does make it easier for the market to respond to any type of a friendly story that comes along,” he explains.

This environment might also pressure the U.S. dollar index, which is friendly for ag exports and prices.

An Important Wildcard In The 2024 Grain Storage Outlook

Tue, 14 Nov 2023 22:15:21 GMT

U.S. grain elevators see potential for big profits in the 2023/2024 marketing year.

According to a recent report from CoBank, an abundance of corn and soybeans has resulted in cheaper basis and bigger carries in futures markets. This follows two years of inverted futures markets.Despite improved conditions for the elevators, there’s a big obstacle standing in the way of their profit potential.

“Many grain farmers have the benefit of being in a very strong cash position following last year’s record farm income levels. They have been quite content to hold on to their grain since prices have fallen,” says Tanner Ehmke, CoBank grains and oilseeds economist.

Lack of Grain Ownership at Elevators
Farmers’ reluctance to sell has resulted in lower levels of grain ownership for elevators and many are currently unable to take advantage of the wider carries and basis levels.

As a result, many elevators are charging higher storage fees and implementing delayed pricing (DP) programs. These programs have become popular as farmers wait for a rally in prices. However, Ehmke encourages elevators to use caution around them.

“Trading DP bushels comes with challenges,” he says. “Although the elevator technically owns these bushels, shipping unpriced bushels is risky since basis could tighten on DP bushels that are already sold – resulting in a loss if the elevator did not sufficiently charge for the service.”

He advises those using DP to acquire corn and soybeans now should make sure their monthly rates are adequately priced to account for the greater financial risk of selling bushels not yet priced by the grower.

Storage Outlook
This scenario, however, is not anticipated to be long term.

“Higher land rents and borrowing costs, combined with rising prices for inputs like fertilizer, will probably motivate farmers to sell as the calendar turns to 2024,” he says.

CoBank anticipates farmers will likely begin selling their crops in January, February and March ahead of spring planting and upcoming operational expenses and/or when prices reach $5/bu. for corn and $14/bu. for soybeans.

The Wildcard
When it comes to basis, any rise is expected to be limited by the large supply of corn and soybeans. At the same time, cheaper transportation rates, strong end-user demand among livestock producers, ethanol plants and soybean crushers should protect it from a significant drop.

Soybean basis in particular is strong due to a smaller U.S. soybean harvest and record processor demand.

The significant unknown, however, revolves around exports.

“The biggest wildcard that could affect the carry in basis is the U.S. corn and soybean export program, which could be awakened by a poor South American harvest, a surprise resurgence of Chinese demand, a return to more normal water levels on the Mississippi River, and weakness in the U.S. dollar,” Ehmke says.

A poor South American crop could mean a tighter basis and narrower spreads in futures – which would look similar to the past two years. A larger crop, however, would likely result in a widening of carries in basis for elevators.

Net Farm Income Projected Lower for 2023 and Beyond with the Forecasted Commodity Reset

Wed, 06 Sep 2023 20:05:55 GMT

The trend of lower net farm income farmers are seeing this year looks like it could continue into next season with projected lower grain prices and a commodity reset taking place similar to 2013. However, experts say the difference is farmers are facing more volatility and higher expenses.

After tight supplies and strong row crop prices for the 2022-23 marketing year, the markets may see a reset. Matt Erickson, ag economist with Farm Credit Services of America says even with drought in nearly half the corn belt, corn production is forecast to rebound. “On the domestic side where we’re expected to have plenty of corn this year. We look at what USDA put out in the August WASDE, 15.3% stocks to use ratio that’s above the 10-year average.”

And projected corn ending stocks at 2.2 billion bushels are above the 10-year average of 1.7 billion bushels. He says it will be hard to make a dent in that. “It would take yields to get down to about 169.7 bushels per acre to get down to that 10-year average.”

For soybeans, the U.S. balance sheet is tight, but South American competition may be a headwind. Erickson says, “Soybeans you know 5.8% stocks to use ratio that’s below the 10-year average, but we also have to look at the situation internationally. On soybeans we have plentiful soybeans if the 2023-24 crop is projected as estimated.”

Higher production costs also hit net farm income this year with record high inputs, which may continue.

Tony Jesina, vice president of insurance with Farm Credit Services of America, says, “Aside from fertilizer, all your other input costs are probably either stable or increasing. Cash rates haven’t come down yet seed prices rarely come down. Interest rates are up, family living expenses are probably not going to come down with what we see for inflation.”

And so, farmers balance sheets may look different from the past few years. He says, “Well for margins it obviously depends on the cost of production put its obviously going to narrow your margins.”

Both say the commodity reset is similar to 2013 in some ways, but there’s added volatility with black swan events making risk management more important.

Fertilizer Free Fall: The Gamble of Locking In Prices

Fri, 18 Aug 2023 12:37:31 GMT

The decision of when to lock in input prices is always a gamble, and in 2023, those who opted to wait might feel like they won the lottery. Fertilizer and herbicide prices have been in a bit of a free fall since spring, a dramatic change from the price shock farmers faced in fall 2022.

According to Ohio State University’s Barry Ward, if farmers locked in their input prices prior to spring, they’ll more than likely harvest their most expensive crop ever this fall. If they waited to buy fertilizer until April or May, the 2022 crop holds that record.

“We look at nitrogen prices, some of the big ones like ammonia and the UAN products, and those prices are 30% to 50% lower than last year,” Ward says.
The data shows anhydrous ammonia dropped 50% year over year, and 30% of that drop happened since March. Phosphorus fertilizer products are 20% below last year.

Most Affordable Prices Since 2004

The price shift was sudden and something Rabobank’s Sam Taylor has also been tracking.

“If you look at the affordability index, it has gone from being atrocious last year to actually one of the best it’s been in decades,” Taylor says.

Rabo’s Affordability Index tracks the wholesale price of a breadbasket of fertilizers, including nitrogen, phosphorus and potassium (NPK). The index compares those prices to current commodity prices. Taylor says the index shows fertilizer prices went from the least affordable since 2008 in 2022 to this year where prices are the most affordable since 2004.

What’s Weighing on Prices Today?

Ward says the sharp decline for key fertilizer products is partially driven by falling crop prices.

“As [crop prices] move, fertilizer prices tend to follow. It’s not always a perfect correlation, though,” Ward adds.

Lower commodity prices can cause some farmers to second guess the amount of fertilizer they buy. But the other major driver? The price of natural gas.

“We saw that really fall out in both North America and Europe throughout the winter,” Ward adds. “A milder winter was part of the driver. So, those lower natural gas prices were a key feature and a key factor in not only nitrogen prices, but also helping to soften some of our phosphorus fertilizer prices.”

High fertilizer prices also caused some demand destruction in 2022, with farmers scaling back on what inputs they decided to buy, he says. The higher prices also enticed fertilizer producers to ramp up production.

“We had bottlenecks creating some of that upward price pressure in 2022. Some of that did ease a little bit as we entered into 2023 and China started to allow a little bit more product to move,” Ward says.

The Reintroduction of a 2022 Wildcard

With ample supplies of herbicides and fertilizer, the question now is: Will input prices stay relatively low through fall?

“It’s tricky because there are a lot of fundamentals at play, some we really can’t sort out, such as the whole Black Sea region and nitrogen and phosphorus fertilizer coming out of Russia,” Ward explains. “That’s an issue that was better, and now it’s likely going to be worse.”

North America doesn’t receive a lot of product directly from Russia, he adds, but as it flows elsewhere, it impacts overall global supplies, which in turn influences prices.

Farmdoc daily points out much of the rise in fertilizer prices during the first half of 2022 was due to trade disruptions stemming from the Russia-Ukraine conflict. Sanctions were placed on exports from Russia and Belarus, which prompted other global producers to implement export restrictions to protect supply.

The Dilemma for Fall

With uncertainty injected back into the fertilizer market today, growers are weighing what to do with fertilizer purchases this fall.

“There is supply, there is inventory,” Taylor says. “Unless something goes cataclysmic in the world, farmers shouldn’t see a huge price correction.”

According to farmdoc daily’s August fertilizer report, there’s still upside risk.

“These market expectations for corn and natural gas prices and current price levels for fertilizer products seem consistent with conditions during late-summer and fall of 2021, prior to the turmoil introduced by the Russia-Ukraine conflict in February 2022. Thus, it might be prudent to consider pricing at least a portion of 2024 fertilizer needs given the ongoing risks in the market,” says the early August report.

Ward has a strong message for growers: If you’re looking to lock in fertilizer prices, get some crop sales on the books as other costs on the farm are projected to climb.

“With fertilizer being a little bit lower than crop chem, there’s still this issue of escalating cash rents across the Midwest, which are going to put pressure on growers,” Ward says.

Farmers Seize Market Opportunities but Concerned about Rising Interest Rates

Thu, 03 Aug 2023 14:01:07 GMT

Farmer optimism inched slightly higher in July, according to the latest Ag Economy Barometer from Purdue University and the CME group, released August 1.

“It’s just a couple of points higher compared to June, but it’s up about 20 points compared to this same time last year,” says Jim Mintert, director, Center for Commercial Agriculture, Purdue University and co-creater of the barometer.

Farmers’ rating of financial conditions on their farms was virtually unchanged in July, compared to June, as the Farm Financial Conditions Index rose just one point to 87 versus a reading of 86 in June.

Looking back to May, however, Mintert says the percentage of producers rating their farm’s financial performance as better than last year improved from 14% to 17%, while those rating financial performance as worse than a year ago fell from 38% to 30% of respondents.

July Rains Helped

Part of what’s at play in Chip Flory’s opinion is farmers are feeling better about their personal yield prospects, given some rains in July, and are seizing market opportunities.

“I think that’s probably got a lot to do with this and just the simple fact that these markets have given some opportunities,” says Flory, a market analyst and host of AgriTalk. “It sounds to me that more and more producers have taken advantage of the markets that were given to them and increased their new crop markets.”

Farmers managed to navigate the market volatility last month, Mintert adds. “That was one of the things that led me to be a little bit surprised. I thought perhaps we’d see some negative things show up, just relative to the fact that these markets have been so volatile as that can create some stress,” he told Flory. “But it was really an interesting survey in terms of people felt a little bit better about their farm’s financial performance. They feel little bit better about making large capital investments. So really some cautious improvement there.”

Concerns About Interest Rates Mount

Mintert says the rising interest rates are increasingly a concern for farmers. The concern was most apparent when farmers were asked about making large capital investments replied that now is a bad time to make that decision.

Last summer, between 14% and 18% of the people in the survey told Mintert and his team that rising interest rates were a primary reason for it being a bad time to make large investments. That sentiment has only grown. Now, almost 40% of farmers surveyed chose rising interest rates as the biggest reason why they thought it was a bad time to be make large investments.

“And we have two thirds of farmers – 65% of people in the survey this month – who expect interest rates to go up over the course of the next year,” Mintert says.

Land Cash Rental Rates Outlook

One thing most farmers surveyed don’t expect to go up are land rental rates. Nearly one-fourth of corn/soybean producers expect farmland cash rental rates to rise in 2024 compared to 2023. Seven out of 10 producers look for no change in 2024’s rental rates.

The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from July 10-14, 2023.

Listen to the full discussion between Flory and Mintert here:

Jerry Gulke: Will High Prices Find the Missing Acres?

Mon, 31 Jul 2023 16:32:13 GMT

The grain markets posted another active week. May corn prices were up 9¢ and May soybean prices were up 30¢, for the week ending April 16. All May wheat classes were up, with Kansas City up nearly 23¢.

Why are prices elevated heading into the planting season? The markets are trying to buy more acres, says Jerry Gulke, president of the Gulke Group .

“Since the shockingly low Prospective Plantings report of 91 million acres of corn, the market has a job to do—that’s not enough to fill needs,” he says. “Corn is trying to compete with soybean acres.”

USDA’s total planted acres of nearly 179 million to main row crops, leaves a deficit of 4 million to 6 million acres, Gulke says. “The market is trying to buy some of those lost acres. Maybe $5 will be the low for December corn prices going forward.”

Gulke says some of his clients in Iowa and Nebraska have converted a pivot or two from soybeans to corn. Farmers are seeing almost $65 an acre more profit than it was a few months ago, he says.

Wheat prices are breaking out to the upside on weather concerns, he says.

“There is supposed to be cold weather from Canada down to Texas,” he says. “Wheat is well enough along that if we get it too cold, we might nip the crop.”

While many commodities were higher this week, livestock prices were all down, especially hogs which are down $7 per hundredweight for the week.

Gulke points to exports as the main price drag in hogs.

“This week exports of hogs were about 17 million pounds,” he says. “The week before it 33 million pounds, and the week before that it was about 64 million pounds. Now you’re exporting about one-fourth as much as three weeks ago—that speaks volumes.”

Hog prices had been in an uptrend. But the week started with a daily key reversal lower, then continued to go lower and ended with a weekly key reversal lower, which was one of the first major sell signals since when the rally began last November.

“After the export report came out, hogs were limit down, Gulke says. “We closed limit down again on Friday. There’s a lot of rhetoric out there that China is going to buy more hogs, but the evidence doesn’t show that. Technically, we may have put a top in for the season.”

Check the latest market prices in AgWeb’s Commodity Markets Center .

Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.

Jerry Gulke: Will High Prices Cause Demand Destruction or Demand Reduction?

Mon, 31 Jul 2023 16:26:44 GMT

Wow. This week saw corn prices top $6 and soybean prices top $15.

July corn prices were up 61.25¢ and July soybean prices were up 94.25¢, for the week ending April 23. July wheat prices were up 59.50¢.

“We’ve sat sideways here for almost eight years, and now we’ve blew up,” says Jerry Gulke, president of the Gulke Group . “These are unprecedented moves. If we would had moves like that in a year, we’d thought we were lucky.”

What caused these major moves? Both supply and demand are at play, Gulke says.

From a supply standpoint, challenges are surfacing for the South American crops. Dry weather is starting to reduce production estimates.

“Planters will be rolling next week, so we’ll be running out of time to find more acres in the U.S.,” Gulke says.

USDA’s March 31 estimate of total planted acres of nearly 179 million to main row crops, leaves a deficit of 4 million to 6 million acres.

“The market is saying we need to find those 4 million to 6 million missing acres, or we’re going to cut demand severely,” he says.

On the flipside, demand has stayed strong thanks to China, Gulke says.

Gulke is working up ground on his Illinois farm. He hopes to plant corn next week.

Technically Speaking by Jerry Gulke

It took eight years, but the weekly down gap shown on the chart below was filled this week and done so with a vengeance. It is rare that such a bull move happens during the early months of the crop year with planting hardly started in earnest.

Planting will indeed happen next week, and we may set a record for a weekly rate. All this was really known last week as forecasts showed little planting resistance starting the last week of April on into May.

May options expired on Friday, April 23, with little profit taking resulting. Grains in general are acting like there is more going on than an effort to buy more acres from either a competitive grain or from the missing 4 million to 5 million acres.

Carbon credits and finally the reformulated biodiesel situation I’ve been mentioning for some time are both getting more attention in the press. The Green Imitative by the Biden Administration is getting more attention not only from a U.S. perspective but from a global perspective, as well.

All things considered, grains closed very positive considering the run they had this week.

The chart below shows how difficult pricing has been. Buying put options and rolling them up has likely cost more money than most had anticipated, a reason why I am not a fan of that strategy.

Selling and defending with call options has its money problem due to the very high costs of re-ownership. Think of the difficulty that lies ahead if/when weather turns price adverse in either direction. Looking back at the previous three runs of 2008, 2011 and 2012 show how swiftly markets can turn on a dime.

So far, a dime has found buyers! Watching markets on a weekly basis should make for interesting times ahead and give volatility a whole new meaning especially with new limits widened appreciably.

CME Group announced that after a routine biannual review, it has decided to expand daily price limits for Chicago Board of Trade grain and soy futures. The new limits will take effect May 2 for trades dated May 3. Following are some of the new limits. (It also widened limits for oats, rough rice, lumber futures and other grain futures contracts.)

Corn: 40¢ per bu. (currently at 25¢ per bu.)
Soybeans: $1 per bu. (70¢ per bu.)
Soymeal: $30 per short ton ($25 per short ton)
Soy oil: 3.5¢ per lb. (2.5¢s per lb.)
SRW and HRW wheat futures: 45¢ per bu. (40¢ per bu.)

Jerry Gulke: Last Chance to Kick the Can

Thu, 27 Jul 2023 15:57:21 GMT

A questionable weather forecast and a flash sale of soybeans to China helped commodities close higher this week, with the exception of November soybean prices.

September corn prices were up 8¢, and December corn prices were up 11.25¢, for the week ending July 23. August soybean prices were up 6.75¢, while November soybean prices were down 12.25¢. September wheat prices were up 16¢

“The dry spots are getting worse, and the good spots are still in decent shape with the proverbial comment of we have to have rain this week,” says Jerry Gulke, president of the Gulke Group . “But we may have run out of “weeks.’ We’re in the crunch time. Soybeans are showing stress with pod filling a big question mark.”

Gulke says his farm in northern Illinois did not receive any of the forecasted precipitation this week. It has been consistently dry.

“The dry parts of the Corn Belt, which appears to be north of I-88 in Illinois and on into Minnesota, North Dakota and South Dakota, show major crop stress,” Gulke says. “I’ve already trimmed my farm’s soybean production by 10% to 15%, and I will likely drop my corn production potential.”

Harvest of spring wheat in the Northern Plains is quickly wrapping up.

“It doesn’t take long to harvest half a crop,” Gulke says. “NASS may be correct in their forecast of 45% to 50% of last year’s production.”

With such a deep reduction in spring wheat yields due to drought, Gulke expects soybeans to follow suit.

“The soybean crop is really on the ragged edge in the dry areas of the northern Plains,” he says. “Remember that’s an area of about 10 million to 12 million acres of soybeans.”

USDA will release its first official estimate of the 2021 U.S. corn and soybean crop production on Thursday, Aug. 12. Objective yield surveys across hundreds of fields in the Midwest will not be used for the August crop estimate. The objective yield survey in August was canceled last year due to the COVID-19 and it was not reinstated this year.

The production estimates will be generated by subjective farmer surveys, satellite data, weather data, yield models, etc. The objective yield surveys will be used for the September, October and November crop estimates.

“It’s unlikely the yields will change,” Gulke says “NASS will probably kick the can down the road until September when they have objective yield data. By September we’ll have a lot of grain harvested, so it may be the most accurate handle on the crop side we’ll have this September compared to anything in the last decade.”

In addition, the Pro Farmer Crop Tour will provide from-the-field crop reports and estimates this month.

For the Aug. 12 report, Gulke says the demand numbers will be the ones to watch.

“China has been seen as a lagging buyer for soybeans, and concerns have been mounting in terms of the real demand for ag commodities,” he says. “The export line item for corn and soybeans will be important to see, as well as what NASS says is happening to the feeding of wheat.”

Gulke will also be watching for NASS’s Safrina corn crop estimate.

“USDA has been printing production numbers for the total corn crop in Brazil of 93 million metric tons (MMT), which is 4 MMT to 6 MMT higher than most trade guesses and private forecasts,” Gulke says. “Brazilian soybean basis seems to indicate Brazil will not be the competitor into our harvest as I once thought, suggesting they are using more soybeans internally.”

Check the latest market prices in AgWeb’s Commodity Markets Center .

Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.

Jerry Gulke: Keep Your Perspective in Volatile Times

Wed, 26 Jul 2023 19:50:09 GMT

Contrary to last week, corn, soybean and wheat prices all found their footings and closed higher. September corn prices were up 19.25¢, and December corn prices were up 16.75¢, for the week ending Aug. 27. September soybean prices were up 65.50¢, and November soybean prices were up 32.5¢. December wheat prices were up 4.25¢.

“If you look at a chart, we’re going sideways really in all these grains,” says Jerry Gulke, president of the Gulke Group . “Markets are kind of like magnets. When it goes to high it snaps back and then if it goes to low it will snap back.”

This week some key growing areas received some much-needed rain, Gulke says. Some areas received 2” to 3” in the last few days.

“The general response I’m getting in corn is that it is what it is at this point—rain won’t add more rows,” he says. “But in soybeans, the rain does help fill flat pods. The question now is if the rains can make bigger beans. With all the adversity we’ve had, we’ve had a lot of just-in-time rains.”

As prices rise and fall this year, Gulke encourages farmers to keep everything in perspective. Prices are still much higher than recent years, so you can’t really make a big mistake selling.”

“You can multiply 200 bu. times $5 corn out of the field and $13 beans time 50 bu. or 60 bu. and the numbers will work out this year—that’s pretty rare,” he says. “It will be a good year. We’ve got to keep things in perspective, and it has been difficult to do that for a lot of people.”

How to Find More Insights

To help you navigate the volatile markets, Jerry is offering a special three-month opportunity for his Gulke Group cash and hedging advice. For more information call 707-365-0601 or email Jerry at Jerry@gulkegroup.com

Check the latest market prices in AgWeb’s Commodity Markets Center .

Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.

Jerry Gulke: Is the Market Reflecting Corn Diseases?

Wed, 26 Jul 2023 19:43:21 GMT

Grain prices saw improvement this week. December corn prices were up 10.25¢, for the week ending Sept. 17. March corn prices were up 8¢. November soybean prices were down 2¢, and January soybean prices were down 2¢. December wheat prices were up 20¢.

So far, 5% of the U.S. corn crop has been harvested as of Sept. 12, per USDA’s crop progress report. Jerry Gulke, president of the Gulke Group , predicts that percentage to jump significantly in the next 10 days.

“Harvest should really pick up next week,” he says. “The weather looks good, and farmers have started combining soybeans and corn. Some spotty yields are coming, and there’s a big variance in yield.”

Disease talk in corn is prevalent this fall, Gulke says.

“We’re hearing more reports from our clients,” he says. “Some were thinking they would have 200 bu. to 210 bu. corn, but it came in at 150 bu. Diseases are bringing down test weights and almost acting like an early frost.”

One such disease is tar spot , which is taking a toll on corn crops in parts of Illinois this week, says Ken Ferrie, Farm Journal Field Agronomist and owner of Crop-Tech Consulting, Heyworth, Ill.

“In a number of fields, not only have the wheels come off the bus, but it’s sliding down the highway on its frame and the sparks are flying,” he says.

Fields with heavy disease pressure that were not sprayed with a fungicide are unlikely to produce a high yield or what could have been a record yield. Now, they are most likely to produce an average to slightly above average crop.

“At best, those fields will still produce a good crop but without a fungicide application, we probably left money on the table,” Ferrie says.

Gulke and others are already calculating yield impacts.

“If you get 8% reduction in test weight (51-52 lb TW) on 25% of the corn crop in the United States, that’s a 2% reduction in total yield or about 3.5 bu. per acre,” he says. “That tightens things again. Traders are starting to do those calculations. So, ended the week stronger because of that.”

Gulke says grain buyers will be closely watching harvest progress, trying to secure grain.

“We could harvest this crop really quickly, perhaps much quicker than normal. Will that bring in farmer selling? The tightness we’re seeing in the basis is a direct result of buyers needing the grain now,” Gulke says. “Buyers are saying, ‘Please don’t store it, sell it to me. I need it.’”

This proves, Gulke says, price is secondary to need: “You can pay a lot of money for a small amount to get you carried over until the price goes down and we harvest more, and the pipeline fills..”

How to Find More Insights

Jerry Gulke: Pre-Report Grain Market Jitters

Wed, 26 Jul 2023 19:19:21 GMT

The grain markets were lower this week, ahead of next week’s USDA reports.

December corn prices were down 15.5¢, for the week ending Nov. 5. March corn prices were down 14.75¢. January soybean prices were down 45.5¢, and March soybean prices were down 43¢. December wheat prices were down 5¢ and Minneapolis wheat prices down 40.25¢,

On Tuesday, Nov. 9, USDA will release its monthly Crop Production and World Agricultural Supply and Demand Estimates reports.

These reports could hold a surprise or two, says Jerry Gulke, president of the Gulke Group . The reports may also follow suit of other recent reports and provide downward price pressure.

“Soybeans have been in a downtrend since last May, I feel like a broken record. We topped old crop corn there, as well,” he says. “With each report, we’ve had a negative response.”

The soybean market specifically has been plagued with consistent negative news, he says.

“In the October report, USDA increase soybean carryout,” Gulke says. “Plus, we’ve had just the opposite of last year’s weather in Brazil — and more acres. And we’ve got wishy-washy China saying they are going to import a lot of beans, but not as much as last year by a couple of tons.”

In corn, he says, the focus will be on USDA’s yield estimate. Ahead of Tuesday’s reports, analysts are predicting small increases in yields, Gulke says to the tune of around 0.5 bushel in each corn and soybeans.

“Based on what we’re hearing from our clients, traders may have grossly underestimated the increase in yield,” he says. “We’re finishing corn and I am again shocked by the by the yield on some of our poor ground. We didn’t think we’d make APH, and we’ve exceeded APH — and we didn’t get any rain until July. I may have to take back everything negative I’ve said about the high cost of corn and soybean seed when the genetics are that good.”

Gulke says USDA may make adjustments to both yield and acres on Tuesday. Or they could delay those changes until January.

“I think there’s more things out there and uh underneath the market that traders are concerned about and one of them is maybe getting blindsided by the report on Tuesday,” he says. “We may have a surprise coming and that could be in a higher yield.”

Check the latest market prices in AgWeb’s Commodity Markets Center .

Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.

Jerry Gulke: Harvest is Over but the Grain Price Party Isn’t

Wed, 26 Jul 2023 19:16:13 GMT

The grain markets reacted to this month’s Crop Production and World Agricultural Supply and Demand Estimates reports completely differently than the last several months. Instead of sinking lower, prices received a nice lift.

December corn prices were up 24.5¢, for the week ending Nov. 12. March corn prices were up 22.5¢. January soybean prices were up 37.75¢, and March soybean prices were up 37.5¢. December wheat prices were up 50.50¢.

Here are the report highlights for soybeans:

Soybean production is forecast at 4.42 billion bushels, down 1% from the previous forecast but up 5% from last year. Based on conditions as of Nov. 1, yields are expected to average 51.2 bu. per harvested acre, down 0.3 bu. from the previous forecast but up 0.2 bu. from 2020.
USDA reports the U.S. soybean outlook for 2021/22 includes lower production and exports and higher ending stocks. Lower yields in Indiana, Iowa, Ohio and Kansas account for most of the change in production.
Exports are reduced this month reflecting reduced global imports and lower-than-expected shipments through October. With use falling more than supply, soybean ending stocks increased 20 million bushels.
The U.S. season-average soybean price for 2020/21 is forecast at $12.10 per bushel, down 25¢.

And the report highlights for corn:

USDA estimates production at 15.1 billion bushels, up less than 1% from the previous forecast and up 7% from 2020. Based on conditions as of Nov. 1, yields are expected to average 177 bu. per harvested acre, up 0.5 bu. from the previous forecast and up 5.6 bu. from last year.
On the supply and demand front, USDA’s corn outlook calls for greater production, increased corn used for ethanol and marginally lower ending stocks.
Corn used for ethanol was raised 50 million bushels. With use rising slightly more than supply, corn ending stocks are lowered 7 million bushels.
The season-average corn price received by producers is unchanged at $5.45 per bushel.

“Many were expecting an increase in soybean yield — not a decrease,” says Jerry Gulke, president of the Gulke Group . “There were some inherently bullish things in the report.”

As of Nov. 7, USDA estimates 84% of the U.S. corn crop is harvested and 87% of the U.S. soybean crop. With harvest nearly complete, these price moves are encouraging, Gulke says.

“Now that harvest has basically ended, prices have found some solid support at some really good levels,” he says. “It was a significant change in the psychology of the market.”

Like grain prices, the U. S. Dollar has gained strength.

“That is a double-edged sword, as our products become less competitive globally,” Gulke says. “But we don’t have global surpluses yet like we may have down the road.”

At the farm level, Gulke says basis has stayed strong through harvest.

“This shows demand may be stronger than we thought,” he says. “There are going to be a lot of projections on the upside now to decide how high is high enough for prices.”

Check the latest market prices in AgWeb’s Commodity Markets Center .

Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.

Jerry Gulke: Will Wheat Be the New Price Trendsetter?

Wed, 26 Jul 2023 17:52:38 GMT

March corn prices were up 6.25¢, for the week ending Dec. 10. May corn prices were up 5.75¢. January soybean prices were basically flat, while March soybean prices were up 3.5¢. March wheat prices were down 18.25¢.

USDA released its monthly Crop Production and World Agricultural Supply and Demand Estimates (WASDE) reports on Dec. 9. Highlights of the WASDE report include:

Corn: This month’s 2021/22 U.S. corn supply and use outlook is unchanged from last month. The projected season-average farm price remains at $5.45 per bushel.
Soybeans: Soybean supply and use projections for 2021/22 are unchanged from last month. Although soybean crush is unchanged, soybean oil production is raised on a higher extraction rate.
Wheat: The outlook for 2021/22 U.S. wheat this month is for slightly lower supplies, unchanged domestic use, reduced exports, and higher ending stocks.

“The wheat market didn’t take the WASDE report very well,” says Jerry Gulke, president of the Gulke Group . “Of course, it has started this downtrend before the crop report—it had dropped a dollar in about three or four days. I think the traders probably smelled something was coming.”

USDA’s global wheat outlook for 2021/22 calls for higher supplies, greater consumption, increased trade and higher ending stocks. Supplies are projected rising by 4.3 million tons to 1,067.5 million, primarily on the combination of increased beginning stocks for Australia and the EU and upward production revisions for Australia, Russia, and Canada. Australia’s production is raised 2.5 million tons to a record 34 million ton.

“When you’re on a trend and suddenly the government says things that indicates that it changed that trend, the traders will look at it and say, ‘Well, I don’t know where it’s going from here, but I know where it’s not going,’” he says. “Since we’re increasing carryout and increasing the crop size for our competitors, the market just dropped.”

Oftentimes, Gulke says, the traders will say, ‘As wheat go, so goes corn.’

“Let’s hope not,” he says. “Let’s hope there is not some negative news that comes into the corn market.”

Soybean and canola oil were both down for the week. He says they continue to be important markets for farmers to watch.

“We’re not gravitating towards the soybean oil and biodiesel situation as we once thought we were,” Gulke says. “But I’m not so sure that global demand for this stuff is not going to exceed what any political leader can do with the demand that’s surfacing. Even airlines are asking for this type of biofuel to cut the admissions. I’m not sure this is over in soybean oil, but it sure shook the loose leaves off the tree.”

Check the latest market prices in AgWeb’s Commodity Markets Center .

Jerry Gulke farms in Illinois and North Dakota. He is president of Gulke Group. Disclaimer: There is substantial risk of loss in trading futures or options, and each investor and trader must consider whether this is a suitable investment. There is no guarantee the advice we give will result in profitable trades. Past performance is not indicative of future results.

The Long View: Grain Market Expectations To 2030

Wed, 26 Jul 2023 17:14:24 GMT

Increasing demand and economic recovery create stable outlook

The COVID-19 pandemic delivered a lasting blow to the global economy. As it slowly recovers, rising global demand for diversified diets and protein will continue to stimulate import demand for feed grains and soybeans, according to USDA’s Agricultural Projections to 2030.

Increased demand for these crops — as well as for wheat, rice and cotton — will be coupled with rising competition from countries such as Brazil, Argentina, the European Union (EU) and the Black Sea region.

Although strong trade competition continues, USDA reports U.S. commodities remain generally competitive in global agricultural markets.

Agricultural exports are expected to grow at an annual rate averaging 2% per year for the rest of the decade. For 2021, U.S. total agricultural exports are projected to increase by 12% to within $350 million of the 2014 record level because of higher prices and stronger export quantities of major field crops

FOCUS ON DEMAND

Corn prices are projected to fall from $3.65 per bushel in 2021/22 to $3.55 in 2024/25, but then remain stable. Growth in domestic corn demand is strongest for feed and residual use, driven by domestic meat production to meet both domestic and export demand for beef, pork and poultry.

Soybean prices are projected to start at $10 per bushel in 2021/22, and to fall through 2025/26 before slowly rising the remainder of the projection period. USDA projects Brazil will take the biggest share of China’s future soybean demand, but U.S. exports and prices also benefit from revived Chinese demand.