Update for November 24th, 2021
Yesterday marked the best close corn futures have posted since July 1st. A lot of speculative interest has returned to the market as acreage intentions for next season continue to puzzle the trade and ethanol margins are strong which is pushing basis bids higher. Analysts are struggling with how to determine what affect higher input costs; supply shortages vs high corn prices will actually have on planted corn acres next season. Some see corn losing 2 to 3 million acres in 2022 while others don’t foresee such a large acreage switch or any at all.
Chinese buyers are rumored to be planning a return to the U.S. corn market sometime during the second half of December or first half of January to secure additional bushels for export. The political relationship between the two nations at that time will likely play a part in the amount they purchase but some think it could be a fairly significant amount.
Corn and wheat have shown a lot of strength over the past few weeks, in fact wheat is now sitting at prices not seen for 9 years. Soybeans, on the other hand have struggled to string together the strong, long-term export business that is needed to sustain higher soy prices. While the talk of higher fertilizer and other corn input costs have supported corn prices, it has taken a toll on the soybean market. Near perfect growing conditions in SAM and the potential for additional U.S. soy acres next season have also limited soybean rallies. The soybean crush is running at near full capacity and the soybean meal market has been strong but has begun to show signs of slowing so now soy oil needs to pick up where the others have left off.
The Biden administration has decided to release 50 million barrels of crude oil from the U.S. strategic petroleum reserve in an effort to ease rising fuel costs. India, China, South Korea, Japan and Britain also plan to release some of their reserves to help control the surging prices they also have. During a broadcast from the White House Biden said, “I told you before that we’re going to take action on these problems. That’s exactly what we’re doing. It will take time, but before long you should see the price of gas drop where you fill up your tank, and in the longer-term we will reduce our reliance on oil as we shift to clean energy.” Keep in mind though that last week the U.S. demand for crude averaged 20.5 million gallons per day. The release of 50 million gallons from the SPR is expected to have little or no effect on fuel prices when you calculate that the amount released only covers U.S. needs for 2.43 days. In all reality this decision could backfire and provoke OPEC to actually slow production ultimately generating even higher prices at the pump.
The chart below essentially measures daily demand for crude oil. Demand average 20.5mil barrels PER DAY last week.
Yesterday the Australian Bureau of Meteorology officially declared that a La Niña weather pattern is in control in the tropical Pacific Ocean. The pattern is expected to be short-lived, lasting for only a few months with the peak forecast for the start of 2022 and then gradually falling back into a neutral pattern by our spring season. Typically a La Niña pattern during the winter months brings hotter and drier weather to the southern tier of the U.S., cold temps in the north-central portion of the country and wetter weather for the eastern Midwest. This deviates from the Old Farmers Almanac winter outlook found at the bottom of the newsletter. Looking at the forecast for Thanksgiving day, much of the central U.S. should expect to see cold temps in the upper 20’s to low 30’s and 25-35 mph winds lasting througout the day. The high temps for the day are shown on the following map.
By 6:00 PM temps are expected to fall into the teens.
Friday, shoppers will start the day with temperatures in the teens but the wind is expected to shift during the day which will warm temps into the 30’s and 40’s once again. Overall, there should be no travel issues during the entire holiday period.
This weekend may be the start of the cold that is predicted to remain in place through December. Maps from NOAA indicate this transition during the period from December 4th through the 17 as well as the development of a much wetter pattern.
The Old Farmers Almanac is calling for “One of the Longest and Coldest Winters in Years” and refers to the upcoming months as “a season of shivers”.