World Factors, Weather Dominate Impacts On Domestic Markets Now
By Harold Walker
The world of grain production and marketing continues to experience extreme volatility. Let’s briefly examine some of the most prevalent challenges.
The weather has been and continues to be the most prevalent challenge to producing a bountiful crop. The traditional Western Plains wheat crop is projected to be one of the poorest since the dust bowl days.
Some analysts project as much as 35 percent of the planted acres will be abandoned and yields on the harvested acres will be significantly diminished. The market has been steadily declining, regardless of growing conditions.
USDA has projected a yield average of 182.1 bushels per acre for all planted corn acres this year. However, the drought monitor does not support that projection. Incidentally, the harvest price for the 2023 corn crop has been steadily declining on the CBOT.
The projected soybean acres were somewhat optimistic, as well as the projected yield. Those prices also have been declining.
The projections above are dependent on a very favorable growing season. When presented, these projections had a negative effect on markets. The potential for some level of drought affecting production across the entire United States is probable.
Export and Import Influence
Due to the poultry industry in the Southeastern United States importing soybeans and soy products from South America, domestic market prices have been depressed.
The war in Ukraine, with exports both uncertain and unreliable, also has had a negative effect on commodity prices. Markets are sensitive to any actions by Russia to allow more or less grain to enter world markets. This contributes significantly to market volatility and helps to create a nervous marketplace for grain.
Domestic Storage and Use
All indications and reports illustrate a larger than normal volume of grain held in domestic storage, with the hope that market prices will surge to levels seen several months ago. As one of the analyst/advisors to the National Farmers Grain Division is so fond of saying, “Don’t hold your breath”.
Ethanol production, a significant user of grain, has been somewhat unstable for the past few months. Drought, economics, questionable utilization, and other uncertainties contribute to that volatility.
Managing Your Price Risk
Farmers and ranchers across the country have an opportunity to extract some of the best prices available in the marketplace by utilizing National Farmers marketing expertise and joining with their neighbors to maximize this advantage.
Risk Management at many levels is available for most commodities. Having personally utilized Grain Marketing Plus and National Farmers Crop Insurance for many years, I highly recommend National Farmers marketing programs to my neighbors and all producers across the U.S.