Market Thoughts 01.23.22
Interesting accomplishment for grains this week:
To summarize the case Andrew makes in that video, we have a bullish outlook for 2022 crop year. Grains have two fundamental stories underpinning them – global fertilizer/input/inflation issues and the multi-year expansion in biodiesel – and against that backdrop it’s unlikely prices suffer a major correction until (if) an above average North American crop is in the book.
With that being the case, this week was a significant one as corn and beans both made new highs for the move. March corn and beans traded to their highest levels since early June and both are within 30 cents or so of making new contract highs. That’s bullish any time but it’s especially bullish when it’s happening in late January. March corn made contract highs in May (beans in early June) during peak production uncertainty and to be close to those highs again in January after producing a record corn yield and second-largest crop ever is somewhat unprecedented. And this latest move isn’t solely a South America weather risk story as decent rain coverage stabilized things there for the moment. Friday featured a corn export sale to “unknown” rumored/assumed to be China and if so would be their first corn purchase in several months. And escalating Russia/Ukraine tensions were supportive earlier in the week (Ukraine is major wheat and corn exporter). Our Price Signals have been suggesting this for quite a while and with corn now finally breaking out higher, should at least test the May 7th highs.