Choppy market action at the CBOT these days. March corn was steady at best and then finished 7 1/4 lower. It’s still trading above the $6 level, but feels vulnerable at that lofty level! Soybeans traded both sides of steady on the day. The March contract settled a nickel higher. A flash sale of new crop beans was announced this morning (first one since Dec 27). It was 4.8 mln bu to an unknown destination. New crop Nov 22 contract traded to about $13.05 at the high. The contract high was set last June at $13.13 3/4. Wheat continues its slow slide to lower levels. Chicago fared best with the nearby contract down just 9 1/4 cents. Nearby KC was down 17. Both contracts are still hanging (barely) above recent lows. The nearby Minneapolis contract was down about 22 cents today. That makes it a 94-cent slide from last week’s high!
The DJIA scored a new, all-time high at 36,952 (up 123 points) about mid-day. But, then Federal Reserve officials released notes from their Dec 14-15 meeting that concerned the equity markets. Basically, they expressed elevated concern about inflation and are now considering an even faster move to curtail economic stimulus (mostly bond buying), and to raise interest rates sooner vs. later. The DJIA index closed 392 points lower. It’s just a blip compared to the 5-year move (82% higher) illustrated below. The COVID-19 collapse in Feb-Mar 2020 was 35%. We’re certainly due for a significant correction. But, let’s hope nothing like a repeat from 2 years ago!
In other outside markets, nearby crude traded as much as $1.58 higher and scored a new, six-week high ($78.58). Selling developed later in the session, though, with the Feb contract settling 86 cents higher on the day. Gasoline futures were up about a penny-and-a-half. The U.S. dollar was slightly lower. Feb hogs rallied more than 2 bucks and closed at $82.275. Good to see the July contract testing the $100 level, falling just short of getting through there today. We haven’t seen $100 hogs since last July.
The U.S. Energy Department reported weekly ethanol production at 1% lower than last week and the lowest output since the week of Thanksgiving. However, it’s still over 1 million barrels per day! It’s also impressive that production for the month of December in 2021 was 9.4% higher than it was December 2020. The USDA presently has corn use for ethanol grind at 5.25 billion bushels for this crop year. At the pace ethanol is being made these days it projects more like 5.5 billion bushels. We expect USDA to bump the estimated corn for ethanol use up at least some in next week’s report.
We thought you might be interested in these observations below we noticed from comments made by Machinery Pete (Greg Peterson) in a U.S. Farm report article from yesterday. He says this past year was “….the hottest used tractor market I’ve ever seen.” The obvious strong farm economy and supply-chain issues for new farm equipment have combined for much of the increase. But, it’s also due to the ever-increasing use of on-line auctions. Here are some examples of sky-high auction prices “Pete” passed along in the article:
- JD 9620RX (2019) w/453 hours, state of IL @ $538,000
- JD 8360R (2014) w/6179 hours, state of WA @ $138,750
- JD 6190R (2015) w/1965 hours, state of AR @ $133,000
- CaseIH 8940 (1999) w/ 4330 hours, state of IA @ $97,000
- JD 4960 (1992) w/4056 hours, state of OH @ $97,000
- CaseIH Maxxum 125 (2009) w/3135 hours, state of IL @ $71,000
- JD 4640 (????) w/ 5536 hours, state of NE @ $42,000
- Kinze 3665 Big Blue Planter (2021) 1,000 acres, state of NE @ $122,000
- JD S780 Combine (2021), 332 hours, state of IL @ $476,000
- JD1775 NT Planter (2021), 2521 acres, state of IL @ $346,000
- Peterbilt 388 Semi (2011), 427,847 miles, state of IL @ $110,000
Crazy high prices. But, remember these were historically high reported values. Pete thinks used farm machinery will remain high through 2022.
New Crop Insurance Endorsement will be available in 2022 called Post Application Coverage Endorsement (PACE). It’s a program that provides supplemental, non-irrigated corn coverage when a producer is prevented from applying split nitrogen during the V3-V10 growth stages due to wet weather and field conditions. Insured does not have to enroll all units of a policy. Even if insured chooses Enterprise Units for MPCI coverage, they can buy the endorsement on Optional Units (pick and choose). Coverage levels vary from 75 to 90%. Sign up deadline is same as MPCI sales closing date > March 15. Availability is limited to certain counties in 11 central U.S. states. We don’t yet know the cost, but will touch on this again when we know. See the links below for more information that is now available:
- Fact Sheet > https://rma.usda.gov/en/Fact-Sheets/National-Fact-Sheets/Post-Application-Coverage-Endorsement
- Eligible Co’s > https://rma.usda.gov/-/media/RMA/Topics/PACE/Eligible-PACE-Counties.ashx?la=en
We did issue new advice yesterday afternoon to reward the soybean rally and the targets were hit last night and again during today’s session.
**Recent Advice**
That’s all for today. See you here tomorrow.
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