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Market Commentary 04/11/2022

Jon Scheve with weekly market commentary made on April, 08, 2022

Usually, the April USDA supply and demand report is one of the least interesting reports of the year, and this month’s report was no exception. From a few minutes before the March 31st report, until Friday’s close after the USDA report on April 8th:

  • July corn is up 40 cents

  • December corn is up 57 cents

  • November soybeans are up 25 cents

  • July wheat is up 28 cents

Beans Due to dry January conditions in Southern Brazil, it seems likely Brazil will produce 700 million fewer bushels (20 million metric tons) than was anticipated by the market last October. Now the market is trying to figure out what demand will do with such a large supply shortage and much higher prices. Originally, the US was expected to carry over 350-400 million bushels from this marketing year to next year. Typically, the US doesn’t export a lot of beans this time of year, but there has been an uptick in export demand which means if that continues, it will be supportive of prices moving forward. US export pace from now until next February will be watched very carefully. While the recent acreage report showed 2.5 million more acres than originally anticipated, if we assume an average 50 bushels per acre, that only means an additional 125 million bushels to the supply side of the market than was anticipated. If Brazil is substantially short on production as is expected, the US may need those additional acres this year. The question will now be if the world is willing to consume less beans at these higher prices. The USDA raised export demand by 25 million bushels this month. If they continue to increase at this pace each month for the rest of the marketing year, there could be a tight balance sheet through next year, even if we have normal weather here in this country this summer. Any hint of dryness during summer could send the market even higher. Corn There has been limited but timely precipitation in Brazil’s second corn crop areas up to now. As a large percent of Brazil’s second crop enters the tasseling stage these next few weeks, dryness will be monitored closely. If it turns dry in Brazil over the next four weeks, then higher prices will be warranted, especially considering the fewer US corn acres forecasted to be planted this year. US weather has been cool recently, but planting should be starting throughout much of the Midwest this coming week. If planting pace is quick, it is reasonable to assume some bean acres will be switched to corn. However, with higher fertilizer prices the switch may not be all that much. We’ll know more when the June 30th report is released. There continues to be concern around the 500 million corn bushels still trapped in Ukraine for the foreseeable future. The war there looks to drag on for quite some time which could keep the product in limbo and would likely keep prices elevated.

Jon Scheve Superior Feed Ingredients, LLC

9358 Oak Ave Waconia, MN 55387


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