Grain Marketing

Grain Marketing


27 June 2022

by FBN Network

Providing critical intelligence based on the collective actions of our farmer members is a key mission of Farmers Business Network®. That’s why we’re excited to share our annual June Acreage Report as a deliverable to help you make critical crop marketing decisions ahead of USDA’s Acreage Report on June 30th.  Despite some weather-related planting delays in the Northern Plains, we found that increased acreage in Minnesota, Wisconsin and Ohio likely helped push the corn acreage number above the USDA's March reading of 90.4 million acres, up from USDA’s March estimate of 89.5.  Soybean acres are pegged at 89.0 million acres, off from USDA’s March forecast of 91.0 million, also pegged to weather in the Dakotas.  Download the 2022 U.S. Acreage Report “The USDA report usually drives volatility that's three to four times greater than a typical trading day," said Kevin McNew, Chief Economist at FBN®.  "With the weather challenges across the country and an uncertain economic climate, our Acreage Report aims to provide our farmer members with the most comprehensive data and intelligence ahead of this report so they can make the best decisions for their operations," said McNew.  Grain markets continue to be on edge as we reach the midpoint of the US growing season. In March, USDA’s Prospective Plantings report suggested farmers intended to plant less corn and more soybeans than in 2021, with forecasted US corn acres at 89.5 million acres and soybeans at 91.0 million acres. They will release their latest acreage estimates on July 1 based on their farmer survey conducted in early June.  Farmer summary We asked members what their actual planted acres were across 9 key crops. Here are some of the key findings from the survey. Corn  Corn acres are expected to climb to 90.4 million acres, up from USDA’s March estimate of 89.5. While corn acres were down by 500,000 in North Dakota and South Dakota versus the March estimate due to poor planting weather, other states were either mostly unchanged to higher. Key states increasing corn acres versus March were Minnesota (up 400,000), Indiana (up 200,000), Ohio (up 200,000), and Wisconsin (up 200,000). Soybeans Soybean acres are pegged at 89.0 million acres, off from USDA’s March forecast of 91.0 million. Again, weather caused North and South Dakota farmers to plant less soybeans by 500,000 acres versus March’s forecast, but other states also pulled back on soy plantings as some switched more into corn, cotton and spring wheat. What it means for the farmer Many farmers have faced challenges this spring as unusually cold and wet weather handicapped planting progress in the Upper Midwest and Northern Plains. Meanwhile, in the Southwest Plains, persistent drought took its toll on winter wheat yield potential, and likely influenced some spring planting decisions as farmers sized up the risks of the drought extending into the summer. Get the free report If you'd like to read the full report, get your free copy today. Members can access this report and more in the  Reports section  of the   app.


24 June 2022

by Kevin McNew

After a steady climb over the past six months from $5.50 to $7.50 a bushel for the bellwether December 2022 futures contract, the past three weeks have seen relative choppy trade keeping prices hovering around the low $7 mark.  USDA’s acreage report at the end of June along with US growing season weather will be key drivers for deciding if futures can reach new highs heading into harvest. Likewise, basis levels for fall delivery will be adjusting as we get closer to harvest and estimates of new supplies start to dial in. Download the 2022 U.S. Acreage Report Current cash forward contracts which quote new-crop basis for delivery this fall have been generally trending higher in the Western Cornbelt but flat to a bit lower in the Eastern Cornbelt. Last year had big corn crops, especially in Ohio and Indiana, which has kept spot basis levels in those states below normal for much of the past six months. Meanwhile in the West, dryness in the Plains and lack of grain supplies has underpinned spot basis for much of the year.  Is this a good time to be locking in the new-crop basis for delivery at harvest? Or would you be better off waiting for new-crop basis to improve? To answer that, we examined 2006-2021 basis bids at harvest for key states and developed our Basis Model to help guide marketing decisions. This model is tuned into a number of factors like US and local production, stocks, ethanol, and exports and gives a basis forecast based on the expected supply and demand situation for this fall.  The results of the forecasts are presented in the chart below for 15 key states. In addition, we illustrate the current year new-crop basis averaged across buyers to compare whether current basis offerings are above or below expected basis levels at harvest. Of the 15 states, only 2 states (KY and MO) show current new-crop basis quotes that are at or below the forecast value for the state. Most states have forecast basis that not only is higher than current quoted basis for that state, but that also is above the long-run average basis at harvest. The key drivers of this are declining US carryout expected for 2022 as well as fairly sizable changes in local production due to acreage changes between 2021 and what is expected in 2022. If USDA were to find even lower acreage in the June survey, and/or if yield potential erodes over the season, then this could add more basis upside this fall. Falling production combined with near-record exports and ethanol production expected in 2022 likely keeps local basis supported heading into harvest, and yet another market where farmers are better off waiting to price on.  New-crop corn basis forecasts Click here to enlarge the image. What it means for the farmer A tightening US and global corn market is unlikely to get corrected in the next six months. Most end users are not eager to bid up basis for this fall, but as the growing season progresses we expect the corn crop size to continue to be downgraded, which likely opens doors for better basis opportunities closer to harvest than what exists today.


31 May 2022

by Diana DeHart

Introducing Diana DeHart - Market Advisor Regional Representative covering the Lower Midwest & Central Plains I've been working as a Farm Market Advisor with  since 2018  and I've been employed in the grain industry since 1994. I grew up on a grain and livestock farm in NW Missouri, and still farm and raise cattle in the area with my family. I started my career in the grain industry with a Co-op in western Indiana as a grain merchandiser.  For 3 years I worked for ADM as a merchandiser, commodity broker and grain facility manager in west central Indiana. In 2005, I moved back to Missouri and worked for a regional co-op in west central Missouri as the grain coordinator. In 2016, I moved back to northwest Missouri to my family farm and worked for a newly constructed shuttle loading facility nearby. In May of 2018 I joined and I have enjoyed the opportunity to work with producers and help them manage their grain marketing risk. May brief The western part of this region has been extremely dry while the north and eastern areas have been fighting rain. Planting in the Lower Midwest areas has been delayed, but mid-May weather gave many producers several short windows that allowed them to get corn in the ground. The Deep South has seen a fair amount of prevent plant claims for corn.  The Wheat Council wrapped up their Kansas tour with an estimated yield of 39.7 bushels per acre versus the average from last year at 47.4 bushels. Production is seen at 261 million bushels, implying USDA’s harvested area total is viewed as too optimistic by the tour. We believe protein shouldn't be an issue for the HRW crop this year.  Old crop basis is holding firm for soybeans and corn in most areas. New crop soybean basis remains steady to slightly weaker. If you'd like to talk about your farm business and how it's being impacted by market dynamics, you can call/text me at . Or .


31 May 2022

by Bill Prince

Introducing Bill Prince - Market Advisor Regional Representative covering the Great Lakes Region I’ve been working with since 2017. Prior to I worked with Cargill as a Market Advisor helping keep customers informed of the issues driving the markets and incorporating details of their farming operations into actionable suggestions to help them make risk management decisions. Understanding your business and how you like to operate is key to a successful relationship. May brief The cold wet start to the Spring planting season has turned around the past couple of weeks. After many long days, much progress has been made with completion in sight. Some areas of Ohio and Michigan are still experiencing high moisture and it is causing delays. The National Weather Service is calling for warmer than average temps, except for MN, ND & MT. Precipitation looks to be dry in the western corn belt and more normal in the Great Lakes Region. Spot basis is strong and If you want to talk about your farm and how it’s being impacted by market dynamics, call or shoot me a text at . Or .


31 May 2022

by Nicole Tonak

Introducing Nicole Tonak - Market Advisor Regional Representative covering the Dakotas and Upper Midwest Region I started with in 2019 as an outside Farm Market Advisor working for local producers helping to manage their grain marketing risk. Prior to I honed my risk management skills by working for a brokerage company and  with Cargill as both a Contract Service Rep. and Farm Market Advisor.  I grew up in, and still reside in East/Central South Dakota. I enjoy working with producers, and learning about their farm business to  further understand and assist in marketing strategies for their operations. May Brief Cooler, wet weather through May has caused significant planting delays throughout the Upper Midwest, especially in the Dakotas. May 22nd US corn planting report was 72%, second slowest for the date in more than 25 years. North Dakota however came in at only 20%. As the Crop Insurance Deadline of May 25th for corn has passed, producers are contemplating the production risks of late planting, changing their acres, or filing for prevent plant. Spring Wheat acres, also in limbo as we close out May, are causing additional strain. If you have any questions as to what decision is best for your Farm Business, contact your crop insurance agent or market advisor. One last Storm system will move through the end of May, before June brings the area warm/dry weather. This will allow a few good planting days ahead of the June 10th Soybean deadline for crop insurance. Old/New crop Basis levels remain steady and currently better than average. If you'd like to talk about your farm business and how it's being impacted by market dynamics, you can call/text at 605.221.8296 . Or .


23 May 2022

by Rejeana Gvillo

Twenty cars carrying around 80 crop scouts left Manhattan, KS early Tuesday morning (May 17)  to fan out across the state and sample wheat yields. This year, wheat yields in Kansas are a big unknown as divergent weather has created yield question marks. In the Northeast part of the state, growing conditions have been mostly favorable hovering around normal for this time of year. But, as you move west and the south, drought and heat have taken their toll, cutting into yield prospects.  Last week USDA released their May forecast for winter wheat yields and pegged the Kansas state yield at 39 bushels per acre, off sharply from last year’s reading of 52 bushels. The estimated yield from the tour came in at 39.7 bushels per acre versus the average from last year at 47.4 bushels.  Production is seen at 261 million bushels, implying USDA’s harvested area total is viewed as too optimistic by the tour. On this year’s tour, Rejeana Gvillo, ’s Senior Economist, was on the road participating in the tour and giving first hand perspectives from her route. Here are some of her comments and observations. The western half of the state is in need of moisture. Having been on the tour previously, this was the first time I did not get damp when walking into a field before lunch.  It was so dry and hot, dew was nonexistent until we were in the Wichita area. There were many (what I would call) aborted (solid white) wheat heads from a combination of freeze damage and/or lack of moisture. There are limited pest/disease issues because it is so dry. Expectations for an above-average protein crop are present. The bulk of the crop was flowering or in the milk stage thus rain in the coming week or two could help and definitely maintain the crop - but would not substantially alter my views on the overall health of the KS wheat crop. Harvest is 2-6 weeks off, depending on the area. In several western/southern fields, stalks are so short that a combine header won’t be able to cut the wheat. My opinion is that USDA’s harvested area expectation is too large. Therefore I expect harvested area to come in lower in the June Acreage report. Winter wheat crop tour - FBN Economist stops Key findings and insights Day 1 Day 1 should have been a pretty decent crop based on USDA’s crop conditions showing the crop rating that was mostly fair. Of the 13 stops, only one stop showed a field level yield that was above last year’s county yield. Freeze damage was observed on stop 5, and yield in that field was off 20 bushels from the county average in 2021. As the route headed West across the northern reaches of the state yields definitely got lower, reflecting the challenging growing season. Read more about the key findings from Day 1. Day 2 Day 2’s scouting tour headed into the worst areas for yield and the findings confirmed how bad it is. Yields fell dramatically as the tour hit the SW corner of KS. But as the tour reached the south central region of the state, yield conditions began to improve.     Read more about the key findings from Day 2. Day 3 Day 3 offered no surprises.  As the tour headed north of Wichita towards Manhattan, but with only a few miles between the cities, Rejeana made just two stops to wrap up the final day of the tour.  Wheat tour coming up short Click here to enlarge the image. Stop 26 - Mulvane KS Stop 27 - Mulvane KS


23 May 2022

by Kevin McNew

On May 18th, UN Secretary General António Guterres warned of a looming global food shortage that could last for years ( ). As wheat prices skyrocket, brought on in part by the war in Eastern Europe, the recent UN alarm highlights the growing humanitarian and geopolitical threats that pointed out in the days following the war’s outbreak nearly two months ago ( ). Unfortunately, there is no near-term solution to curb runaway food inflation. While US farmers will begin harvesting winter wheat in the coming months, a recent report by USDA shows little optimism for a bumper crop to cushion global shortages. According to that report, USDA expects the 2022 US winter wheat crop to be 8% lower than 2021 and, if realized, this year’s constrained harvest would be the third smallest crop in the past 20 years.   Over the past 9 months, the La Niña weather phenomenon has been like a tactical missile intent on wreaking the most damage to key winter wheat areas. Heading into planting last Fall, conditions were unusually dry across stretching from Texas up to the Central Plains and west towards the Rocky Mountain front range, the breadbasket of the US which accounts for one half of all winter wheat supplies. As winter gave way to spring and farmers looked to the skies for crop saving moisture, Mother Nature proved unyielding and La Niña’s persistence brought ever worsening drought conditions. U.S. Southwest Plains drought monitor Sizing up a potential disaster USDA’s May 12th survey showed lower than expected production, but that may only be the start of what could be further downgrades to an already diminished crop. This week, the Wheat Quality Council conducted its annual fact finding expedition sending 80 scouts across Kansas and parts of nearby states to collect their own assessments. was part of this excursion (see results for , , and Day 3) and found little reason to second guess the lower benchmark of USDA.  conducted its own poll simultaneously this week, querying our farmers across these 5 states about their yield expectations. The results of that poll are illustrated below in the map and tables. Farmer yield expectations conform closely to the USDA assessment, but in some cases could prove to be worse than what USDA found in the early May survey. Of the 5 states, farmers expected lower yields in 4 states versus what was found by USDA. Also, there were fairly high claims of total crop losses from farmers, which was also found by Wheat Tour Scouts, suggesting that more than normal acres could be abandoned.  wheat yield shows big downgrade What it means for the farmer We expect the yield and production potential for HRW wheat to be downgraded as we get into harvest. Better moisture in the Northern Plains and into Montana could help limit some of the downgrade from the southern reaches. But it will do little to stem the trend of dwindling HRW stocks in the US.


20 May 2022

by Rejeana Gvillo

Rejeana Gvillo, Senior Economist at  , is on the road in Kansas with the Wheat Council Tour. Follow her posts to get firsthand perspectives from her route. Here are the key findings and insights from Day 2’s route. Read about Day 1's Tour Results here. Key findings and insights Day 2’s scouting tour by Economist Rejeana Gvillo headed into the worst areas for yield and the findings confirmed how bad it is. Yields fell dramatically as the tour hit the SW corner of KS. But as the tour reached the south central region of the state, yield conditions began to improve.  Winter wheat crop tour - FBN Economist stops Stop 14 - Tribune KS Stop 15 - Richland KS Stop 16 - Johnson City KS Stop 17 - Stano KS Stop 18 - Sublette KS Stop 19 - Kismet KS Stop 20 - Meade Center KS Stop 21 - Sitka KS Stop 22 - Coldwater KS Stop 23 - Sharon KS Stop 24 - Crystal Springs KS Stop 25 - Suppesville KS Wheat tour coming up short Click here to enlarge the image. What it means for the farmer Kansas farmers are seeing wildly variable growing conditions this season, and day 2 of the tour saw the impact on yields. Widespread losses are expected in the SW stretches of the state, while central and Eastern regions are normal, to perhaps even a bit above normal. With one day left on the tour, it seems likely that USDA’s 39 bushel mark for KS in their May estimate is about where the KS Wheat Tour will land. The overall tour average for day 1 was 39.5 and day 2 was 37.


18 May 2022

by Rejeana Gvillo

Rejeana Gvillo, Senior Economist at , is on the road in Kansas with the Wheat Council Tour. Follow her posts to get firsthand perspectives from her route. Twenty cars carrying 80 crop scouts left Manhattan, KS early Tuesday morning ready to fan out across the state and sample wheat yields. This year, wheat yields in Kansas are a big unknown as divergent weather has created big yield question marks. In the Northeast part of the state growing conditions have been mostly favorable hovering around normal for this time of year. As you move more to the Southwest corner of the state, drought and heat have taken their toll and likely cut deeply into yields.  Last week, USDA released their May forecast for winter wheat yields, and pegged the Kansas state yield at 39 bushels per acre, off sharply from last year’s reading of 52 bushels. With the world grappling with the loss of Ukraine and Russian wheat from fully reaching international buyers, any more drawdown in the largest US wheat state could be a further catalyst for record-high wheat prices. Wednesday, May 18 will be conducting our own Virtual Wheat Yield poll with text polling happening in CO, KS, NE, OK, and TX! Look for the results to be released soon in conjunction with the final numbers from the Wheat tour. Key findings and insights Day 1 should have been a pretty decent crop based on USDA’s crop conditions showing the crop rating that was mostly fair. Of the 13 stops, only one stop showed a field level yield that was above last year’s county yield. Freeze damage was observed on stop 5, and yield in that field was off 20 bushels from the county average in 2021. As the route headed West across the northern reaches of the state yields definitely got lower, reflecting the challenging growing season. Winter wheat crop tour - FBN Economist stops Stop 1 - Chapman KS Stop 2 - Salina KS Stop 3 - Minneapolis KS Stop 4 - Delphos Stop 5 - Concordia KS Stop 6 - Soloman Rapids KS Stop 7 - Downs KS Stop 8 - Woodston KS Stop 9 - Webster Park KS Stop 10 - Hill City KS Stop 11 - Morland KS Stop 12 - Studley KS Stop 13 - Menlo KS What it means for the farmer While this is only one route from day 1, there was little here to suggest yields are better than what USDA pegged last week from their objective survey.


10 May 2022

by Kevin McNew

It has not been a good growing season for wheat farmers in Kansas, Oklahoma and Texas. Even in the fall when wheat was seeded, conditions were not particularly good and in many regions it has gotten much worse over the past six months. Case in point, Stevens County, Kansas in the southwest part of the state. At planting time in the fall about 24% of the county was in a moderate drought, the lowest classification by the UNL’s Drought Monitor. But today, the drought reading stands at 70% of the county classified as being in exceptional drought, which is the most severe drought rating.  Although some moisture has occurred in dry areas of the Southern Plains over the past week, it may be too little and too late to salvage the crop for some producers.  So far no official government estimates have been made, with the first winter wheat yield survey-based estimate coming from USDA on May 12th. Here, we present estimates for the biggest and most drought-impacted states of Kansas, Oklahoma and Texas to try and assess the potential for yield there. These three states combined account for about one third of all US wheat production, and so losses there can be meaningful for the overall US wheat picture. The model we use is based on several key metrics, covering the past 31 growing seasons: county average soil moisture readings, daily county weather data (i.e. temperature and precipitation) and state level crop condition ratings.   The forecasted yields for each state show significant downgrades from last year’s tallies. Kansas is expected to see the biggest drawdown, with state average yields expected to be slashed by nearly 9 bushels an acre. In total, the expected losses for these 3 states would be about nearly 90 million bushels of lower production this year compared to last year. On an entire US wheat crop that would be around 1,900 MB at trend line US yields of 49.5, this magnitude of loss from these 3 key states would be hard to overcome as it accounts for roughly a 5% loss just from these states. Certainly, some regions will likely fare better and help buffer the steep losses in the Southern Plains, but the market will likely have to focus on an exceptionally tight HRW wheat balance sheet after multiple years of excess supplies.  What it means for the farmer With all that is going on in Eastern Europe and the global trade disruptions, adding in a big loss to the US wheat crop could create more upside. The KC wheat market in particular may see the best upside here as prices will need to price in exceptionally tight stocks. In the past few weeks, the KC price premium versus Chicago has dwindled but that should begin to elevate as more visibility occurs around the damage in these key growing regions.