Play Turner’s Take Ag Marketing Podcast Episode 296

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes!

NEW PODCAST

In this podcast we go over US new crop acreage estimates and what it could mean for corn, soybean and wheat prices in 2022. Based on our work it seems like there is not enough US acres to go around. Without trendline yields or better, 2022 might bring another marketing year of tight ending stocks and elevated prices. Make sure you take a listen to this week’s Turner’s Take Podcast!

If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777 to try it out for free!  You may also click here to register for Turner’s Take.

CORN

Corn and soybean acres tend to max out around 180mm in the US.  We currently have new crop corn at 91mm acres which leaves 89mm for soybeans.  Some may say the corn number is too low but with high input costs and high prices of other commodities, we think acres will be lower for corn outside the main corn belt.

Below is a chart of major corn exporter stock/usage ratios going back twenty year.  According to the Jan USDA global exporter are at 8.5% stock/usage.  The lows in 2011 and 2020 were 7%.  When production losses in S. America are all account for we could be back at that 7% low again for 2022.

Click here to open an account with Craig Turner & StoneX today!

At 91mm acres and a trend line 180 yield (which would be a record by 3 bpa), US production just barely keeps up with demand.  Ethanol use is ahead of USDA pace needed to meet WASDE expectations. The USDA will most likely have to raise ethanol use by 50 to 100mm bushels.  Production losses in S. America could shift 100 to 200mm bushels in exports back to the US. The point is ending stocks are probably closer to 1.2 to 1.3 billion instead of 1.5 billion.  Also note that at 91mm acres and a record 180 bpa ending stocks do not change year over year.

I like buying call spread and selling put spreads in July for spec and farmer re-ownership.  For farmers looking to sell new crop during the growing season I think some courage calls to sell into make a lot of sense too. Call me and we can figure out the best strategy for your account.

SOYBEANS

Soybeans at 89mm and a national 51 bpa keeps US production equal to total demand.  Major exporters have tight stock to usage on par with the 2011 lows.  Soybean production losses in S. America could lead to the tightest stock/usage ratios for major exporters in the past 20 years.

While soybeans are charging higher, canola and EU rapeseed are trading at $18 and $19 per bushel respectively.  The market is aggressively price rationing canola and rapeseed and encouraging consumers to substitute soybeans for oilseed products.  As the marketing year goes on we could see more soybean demand come from traditional canola/rapeseed buyers.

The USDA has old crop soybean carryout at 350 but since the Jan WASDE S. American produciton estimates have come down another 5-6 MMT. Another 100 to 125mm bushels of export demand could come back to the US. That could put ending stocks closer to 225 to 250mm bushels.  Keep in mind at 89mm acres and a 51 yield new crop ending stocks don’t change year-over-year.  Some will argue 89mm is too high if corn is at 92 or 93mm acres.  There is just not enough acres to go around this year.

WHEAT

.Major wheat exporter stock/usage is as tight as it was back in 2007 when we had $20 wheat!

 

At 48mm acres for All Wheat and a healty 49 bpa yield, ending stocks are the same year-over-year.  That could be a tall order considering the drought we are seeing in HRW country.  Some may say 48mm acres are too high, but anything less sends stocks lower even with a trend line yield or higher.  Winter wheat needs to stay above $7 and spring wheat above $9 to attract sufficient acres.

Outlook

There is not enough acres to go around to make sure every major grain and oilseed market is adequately supplied next marketing year without trend line yields or higher across the board. This sets up for a volatile planting and growing season.  Based on our work the bias is to the upside with the potential for extreme price swings if weather markets develop.

About Turner’s Take Podcast and Newsletter

If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! Craig Turner – Commodity Futures Broker 312-706-7610 cturner@danielstrading.com Turner’s Take Ag Marketing: https://www.turnerstakeag.com Turner’s Take Spec: https://www.turnerstake.com Twitter: @Turners_Take Contact Craig Turner

Subscribe to Turner’s Take Newsletter & Podcast

Turner’s Take Newsletter & Podcast – Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.

Subscribe to Turner’s Take Newsletter & Podcast
Learn More
View a Sample

Contact Daniels Trading

To open an account or request more information, contact us at (800) 800-3840 or info@danielstrading.com and mention Craig Turner.

Risk Disclosure

The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI does business as Daniels Trading/Top Third/Futures Online. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI.

Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.

© 2022 StoneX Group Inc. All Rights Reserved

About Craig Turner

Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com. Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.