Play Turner’s Take Ag Marketing Podcast Episode 290
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It is Thanksgiving week and we are already seeing lower volumes and less trader participation. Money flow is still coming into commodities from the inflation trade. Interest rates are on the rise. Western Europe nations are starting to impose lockdowns for COVID and that has pressured the energy markets. At the CBOT wheat continues to lead the ag markets. We talk about all of it on this week’s Turner’s Take podcast!
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Thanksgiving week tends to be a slow week at the office. Each day the volumes get lighter. The US markets are closed on Thursday. Wednesday is a full day of trading but it feels like a half day. Friday is a half day of trading and it feels like a holiday. I’ll be around so give me a call or send an email if you need anything.
Wheat rallied again today as rains in Australia threaten to reduced the quality of the new crop. Below is a chart of Major Wheat Exporters Carryout and Stocks/Usage Ratios. I like this chart because it shows how tight the world is with respect to exportable wheat. The new harvest in Argentina and Australia will help but I don’t think we see a material build in supplies until the next Northern Hemisphere harvest.
This is a histogram for new crop Hard Spring Wheat (Minneapolis). We should see an expansion of acres for spring wheat in the US and Canada. They say “high prices cure high prices” and new crop MW is getting to very high levels. Sept (new crop) closed at 9.35 today. That is in the top 5% of prices over the past 10 years. Farmers should look to sell some new crop spring wheat at $9.40 or better. I would do at least 10% of expected new crop production.
The high price of fertilizer and other chemicals is causing a significant spike in corn inputs this year. Analysts are predicting some acres switching from corn to wheat and soybeans. Below is a chart of urea at the gulf. Prices just seem to keep climbing higher.
Corn prices in the US and around the globe continues to be elevated. Corn in China is still over $10. The US is competitively priced on the world market despite the high valuation of the US Dollar. The chart below shows the stock/usage for major corn exporters. Any significant increase in use or supply loss could send us the US exporters to historically tight stock/usage levels. This chart (combined with the price of wheat) best explains how US corn carryout can be 1.5 billion yet old crop can be $5.75 post harvest.
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