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Market Commentary for 9/23/23

Jon Scheve with weekly market commentary made on September 22, 2023

Like US corn, the US bean export pace is behind USDA estimates and may not be strong enough to support current prices. Reports indicate China has purchased beans from Brazil for October and part of November, which is usually a time reserved for US product. If this trend continues, bean futures values may be negatively impacted. Plus, dry weather throughout the Mississippi River basin is forcing higher than normal freight rates, which is not helping US bean prices globally. Similarly, limited rain in Panama has reduced navigation through the canal and increased freight charges to Asia too. In the meantime, uncertainty in the bean market will continue until more is harvested and better yield estimates can be determined. Discussing Yields with Other Farmers Throughout the Corn Belt Conversations between farmers throughout the corn belt is often tricky because information can be misinterpreted or misleading by accident. When asked how their crop looks this year, a farmer may say, “yields are nowhere close to last year.” This may sound concerning, especially if someone is unfamiliar with the area or what last year was like. That is why when discussing yields with farmers, I ask more questions to gain a better perspective.

  • How much are your yields above or below “normal”?

  • What were your yields last year?

  • What are normal yields for you?

That same farmer may then say, “I raised a record crop last year, which was 10% more than normal.” Now, rather than the statement above sounding concerning, the additional information indicates the farmer may be a little more negative than they should be. I also find when I ask about their yields, many farmers will tell you how bad or good parts of their fields are, but they rarely provide an accurate picture of the whole field or farm average. That is why I prefer to ask how their yields are comparing to normal for a better perspective. Be Careful Listening to Someone Talk About Their Position Often a farmer’s attitude on the market and what they think their yields will be is impacted heavily on how much of their old crop is still in storage or how much of their new crop is sold. Typically, farmers with no new crop sold think their yields and the national yield will be different than the farmers who have their new crop sold or are using risk management tools to protect it. Farmers are not alone in this bias either. Most market analysts and end users do the same thing. It seems to be human nature to have a perspective that suits your hopes and wants. Therefore, to gain more perspective, I frequently ask farmers who give me yield reports what percent of their crop is marketed, which usually indicates if they are leaning bullish or bearish. For instance, in years like 2023 when prices fell dramatically, farmers with little crop sold will stay bullish to justify not selling earlier and try to convince me yields are much worse than they might actually be. Conversely, those who have crop sold or protected may lean more bearish and think yields are better than they really are to support their position. Bottomline Trying to understand the full scope of crop conditions and yields is good. However, it is important to avoid seeking out answers that only justify your desired outcome. Instead, it is usually more profitable to gather information and have a grain marketing strategy that is open to different results and outcomes. Don’t be afraid to ask other farmers what percentage of their crop is priced. This type of question avoids them having to share with you the price they sold or how many bushels they raised, which they may feel is none of your business. But, by knowing how much they have sold you can see if they lean more bullish or bearish, and if the information they share about their crop may be inadvertently biased.

Jon Scheve Superior Feed Ingredients, LLC

9358 Oak Ave Waconia, MN 55387


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