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Update for December 16th, 2022

Corn and Soybean 50-Year Price Charts and 33 Year Lows Expected

Demand headlines in the corn sector are few and far between. Weekly ethanol numbers indicate another small reduction in production last week along with higher ending stocks. Weather is an important part of market price movement and right now there is no U.S. weather story and the SAM weather has been mostly mixed. Traders need to see strong demand to keep prices elevated but with prices trading near $6.50/bushel growth in overall demand is not easily accomplished. The 50-year chart shown below shows that current prices are still near the upper end of the high range, but notice that very rarely do prices stay elevated for any extended period of time and are then able make another move higher.

Tight global supplies, stronger-than-expected weekly export sales and weather concerns regarding the Argentine crop are helping to support the soybean market. Argentina is the world’s largest exporter of meal so any complications that arise get the trades attention very quickly. Disappointing U.S. crush data compared to the previous month and the same month a year ago as well as Chinese demand and our overall relationship with the Chinese government are all partially responsible for keeping soybean prices from breaking through the $14.80 to $15.00 range. A 50-year soybean price chart shown below illustrates where are prices today and comparatively they are still at very good levels.

Reuters reports that deforestation in Brazil’s Cerrado savanna has hit a seven-year high. The Cerrado “is the world’s most species-rich savanna.” Data this week showed that vital habitats for endangered species and the removal of native vegetation increased to 4,127 square miles according to a statement from the space research agency. This process of expanding acres for agriculture has been occurring for decades and has destroyed nearly 50% of the savanna’s natural vegetation.

As China’s Covid Zero policy is eased cases around the country are rising quickly. Bloomberg is reporting that elderly care homes have shut their doors to all entries and exits in an effort to protect residents. Bloomberg Intelligence estimates that hospitalizations across the nation may rise as high as 5 million resulting in up to 700,000 deaths as a result of abandoning the Zero policy. If the country changes course and returns to the old lockdown system to control the spread, you have to wonder if demand for soybeans and crude oil imports will be impacted further?

United Nations aid chief Martin Griffiths has said that it is unlikely the Ukraine/Russia grain agreement will include any additional Black Sea ports as they had hoped. He said, “I don’t see that happening in the next, near term.” Ships loaded with grain continue to leave from Odessa ports following a pause on Sunday as a result of power cuts caused by missile strikes. 8 ships loaded with 238,600 metric tons of agriculture products were able to leave the ports of Greater Odessa mid-week headed to Asia and Europe. There are an additional 23 ships waiting to load at the ports of Odessa, they are expected to carry 690,000MT once loaded. (Reuters) Even though exports have been restricted Ukraine remains the world’s 4th largest corn exporting nation.

Farmers in Ukraine have had obstacles standing in their way throughout the last growing season. Safe fields to work, supply issues and low crop prices to name a few. Now this harvest has been plagued by blackouts and record autumn rainfall which has left 34% of this year’s corn crop stranded in the fields as winter arrives. Harvest has been progressing at “record slow” speed and much of that corn is wet and needs to be dried but Russian strikes on Ukrainian infrastructure has limited the electricity that can be used to do so. The 2-week weather outlook calls for more snow and showers which will push back any hope of harvesting the remaining crop, before spring, until early next year. (Bloomberg)

Winter with all its ingredients has arrived. With air direct from Siberia (the coldest air on the planet) headed our direction prepare for the coldest week leading up to Christmas that we have experienced since 1989. The all-time-record low temp ever registered in the Quad Cities during the month of December occurred on December 23rd, 1989. That year the surge brought record cold and snow to the deep south including Florida.

The set-up this year is similar but less extreme but has the capability of lowering temps from December 22-24th to the coldest in 33 years. The first map that follows shows the powerful high that directed the cold right over Nebraska in 1989.

The next map is what is forecast for December 23rd, 2022. Notice the high is located in a similar position to the high in 1989.

Expected low temps for December 23rd according to the EURO model are shown in the following map. The possibility of very low wind chills also exists and could produce dangerous temps around -35-40 below zero, this is illustrated in the second map.

Analogs help with long-range forecasting, it gives meteorologists reliable clues as to the likelihood of certain weather conditions occuring and for this year 1989 appears to be the strongest candidate to foretell what is likely headed out way.

Snow chances increase once again next week Wednesday/Thursday when ingredients will be in place for some high accumulations. Arctic air masses are always expected to bring wind and the type of snow expected next week is the kind that will easily blow around. Blowing and drifting snow and deadly wind chills will create dangerous travel. Early snowfall estimates from both the EURO and GFS are shown in the two maps that follow.

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