Unprecedented World Impacts Chart Grain Market Course Now
By Harold Walker
A myriad of events are influencing grain markets and activity at the Chicago Board of Trade. This summer’s weather, the Russo-Ukrainian War, and the potential for a U.S. recession are major concerns of all participants in grain marketing. At this point, we have no way of knowing which single factor or the combination of multiple factors will influence all segments of agriculture and commodities.
1. Weather The Kansas State Convention was held August 3 and 4 in far Northwestern Kansas. Those of us driving noticed thousands of acres of corn and soybeans that will be unfit for harvest this growing season and will simply be abandoned. Similar conditions exist in Nebraska, California, and other states, as well.
We believe excessive rain and flooding will reduce yields in Southern Ohio, Central and Southern Illinois, Indiana, and Kentucky. This not only impacts this crop year, but the supply of grain until the 2023 harvest.
2. Russo-Ukrainian War The continuing war in Ukraine has had a profound effect on the world’s grain supply. We will see the lasting effects for years to come as facilities and equipment have been destroyed, the Ukrainian agricultural infrastructure severely crippled, and a nation whose peoples are currently experiencing food shortages.
Further, Ukraine once accounted for more than 15 percent of the world’s grain exports. These circumstances will influence global and domestic markets, both now and into the future.
3. Potential U.S. Recession There is great speculation for the potential of a recession, as all Americans have been struggling with inflation at 40-year highs. Recently, I was quoted a price of $980.00 per ton for anhydrous ammonia if I prepaid for my next year’s needs now. Should an extended recession occur, the prices received for our commodities will likely decline rapidly, making profitability even more challenging.
4. Marketing Advice Although your final cropping plans for 2023 and 2024 may not be completed at this time, you should consider pricing opportunities now for both 2023 and 2024 crops. In early August, CBOT futures prices were, in most cases, above the cost of production, but of course we simply don’t know if inflation will remain high, which could severly impact our production costs.
You may not realize our Grain Marketing Plus Program promotes multiple sales throughout the marketing year to mitigate risk and capture the best pricing available. I urge you to visit with your National Farmers Grain Marketing Plus representative and your National Farmers Crop Insurance agent to develop a profitable marketing strategy. There are strategies to combine crop insurance with our marketing tools that will put you ahead. Our representatives are knowledgeable and will always work for your best interests.
The above topics and the effect on ag profitability reinforce the necessity to have a knowledgeable marketing representative to assist in formulating and executing a comprehensive marketing plan.
Your National Farmers representatives provide this knowledge and expertise. Join with your neighbors to market collectively and bargain for the best prices available. I wish all producers good crops, a safe harvest, and good health.