COLUMBIA GRAIN PRODUCER SOLUTIONS

Phil Symons

What we all have experienced in the futures market this past year is a great reminder of the importance of getting your marketing plan and target sale prices working. The daily, weekly and monthly volatility that we have seen this past year has given us some wonderful opportunities to get sales on the books using Good ‘til Cancelled orders. The use of Good ‘til Cancelled orders help remove some of the emotion behind pulling the trigger on your sales and can be used for all aspects of our marketing tools from Cash orders, HTA, Basis and even Accumulator contracts. Be sure to get your marketing ideas out there and working with your local Columbia Grain Merchandiser.     

We will be rolling out some new ways for you to access our local cash bids for your commodities – please stay tuned for more information on this exciting news in the coming weeks.  



HARD RED SPRING WHEAT

Sam Ohden, Merchant

Spring wheat futures have found themselves rangebound between 9.30 and 9.00 in the March contract. Over the last few weeks, farmer selling has picked up while international and domestic end user interest has been minimal, which has pressured basis. Cash prices between HRS & HRW have see-sawed the whole year with HRW having gained ground on HRS recently due to dryness in the So. Plains, a large slug of HRW donation CCC business in the US Gulf, and waning HRS demand. 

I expect that spring wheat will be a follower to the rest of the wheat complex as we move forward, which has solid support given corn prices are elevated to the point where wheat is at risk of finding its way into a consistent feed ration in the SW and SE regions of the US. We’re in the middle of the

RMA crop insurance averaging period, and at this point, market inputs

tend to favor less spring wheat acres in North Dakota/Minnesota/South Dakota due to row crop pricing. This is less-so the case in Montana, but I expect that intermarket price volatility will increase as we approach spring planting dates. 

On the demand side of the equation, there’s little new development to report. Canadian WRS is still far cheaper than US origin, relegating the US to our core, price inelastic customers. I do not see this changing through the balance of old crop, as there is ample supply of far lower priced wheat in the global market ex Australia, Russia, and Ukraine. 



HARD RED WINTER WHEAT

Justin Beach, Merchant

The WASDE was a real snoozer today but wanted to discuss the main takeaways.

• Ukraine wheat exports up 2MMT
• Russian wheat exports up 0.50MMT
• Aussie wheat production up 1.4MMT
• Russian wheat production up 1MMT

Looking forward all eyes will remain on the drought monitor and right now things look really ugly. Yes, we have seen some relief as of late but there’s widespread concerns in TX, OK, KS, NE, and MT. By the way, these are the largest 5 states for HRW production. The market is focusing on inverses, high interest cost, tight stocks, and poor conditions. We can’t emphasize enough the ability of wheat importers to shift away from US wheat to considerably cheaper alternative origins. Export sales pace as of late has been horrid off the PNW and we don’t believe that will change until we see a fresh crop. Luckily, we may be too tight domestically to want to go find more export business and the next 30-45 days will be focused on the domestic acreage battle and that should support the complex. Also, talks of HRW making it in to feed rations have been put to bed as of late and that was much needed as we are just too tight to be feeding HRW. Old support seems to be new resistance at this point but once the crop gets in the ground the function of the market will be to find new demand and that’s when things get to look  scarier. We believe the recent rally was warranted but now we’ve gotten to a market in which rallies should be rewarded with cash sales.



Ryan Statz, Merchant

DURUM

Markets continue to feel heavy on overall lack of demand for new business. Yes, we have seen the likes of Tunisia and Algeria pick away tonnage of late, but this business was largely anticipated with much of the supply already covered and ready to ship. Now, the question is, will there be more to come in behind it? This ‘slow’ or ‘loss’ of international demand thought process has the US market in an uneasy feeling and prices have retreated back for the time being.

On February 8^th, 2023, the USDA issued their February 2023 WASDE Report to update supply and demand projections for the 22/23 crop. Production is nearly finalized, now the question is on the demand side as we set ourselves up for what the 23/24 crop may look like. 

In large part, material changes were minimal. But it’s important to note that ending stocks (while up 1 mil bushels from their January projections) are forecasted to remain tight at 28 mil bu (up from 24 mil bu LY). While current prices don’t justify forecasted tightness, without demand, the market doesn’t need to push markets. It’s a pace/flow game and right now its steady at current prices without either side loading up to the long or short side. Demand will need to lead the way to change market prices. 

BARLEY

Barley markets in the old and new crop have been quiet as of late. In the old, maltsters are trying to do everything they can to keep pipelines in an adequate position while also knowing at the same point in time barley stocks are in the market and are slowly trickling out. Maltsters are also well aware of new crop markets and conditions and know that a quality crop on top of a significant acreage uptick could lead to further price weakness.  

In the new crop, buyers are doing everything they can to avoid what happened to their supply chains the last few years. Throughout this period, AOG coverage was not adequately put on by buyers and when poor growing conditions led to smaller crops, they were forced to operate in very tight supply environments. To procure supply, prices firmed as they pushed aggressively for coverage; with this freshly in buyer’s minds, maltsters came out of the gates early with strong prices to try and buy in AOG acres for ‘23/24 crop. Since the early strength, markets have cooled off as coverage is assessed. We are hearing a lot of ‘23/24 was bought from growers early on which will give maltsters a chance to taper interest back some. This is a concern that needs to be watched. Note that Montana really is the last piece to getting overall barley supply chains back to comfortable levels – Idaho and ND are coming off of very good crops in ‘22/23. If Montana pushes overall supply back to adequate levels - the $7.00-8.00/bu price environment may be in the rearview mirrors.   

Please stay in touch with your local CGI buyer about options and what can be done for you.  

SOFT WHITE WHEAT

Steve Yorke, Merchant 

Another couple of weeks of stagnant market movement for white wheat bids. Currently bids are still in the 8.25-8.50 range with slow grower selling keeping things steady at the moment. Demand has slowed up, but the exporter is still slightly short into March. More business will be needed if the grower decides to let another chunk of grain move. The typical white wheat buyers have done their job but we will need some more China biz and/or Yemen(CCC) donation sales to keep bids above $8.00. Today’s USDA report increased white wheat exports to 190mbu which lowered ending stocks to 45mbu. We will need a good crop in 2023 to replenish the balance sheet. New crop is stuck at $7.80 with very little trading at this time. HTA’s or accumulators or a mix of should be considered for August or December. Leaving basis to be set at a later date. As always please place your orders with our buyers to insure you capture rallies. White wheat basis moves quickly as you all know! Look for upcoming grower meetings and Producer Solutions meetings in your area or call in to set up one on one meetings to discuss marketing ideas. 



OILSEEDS

Sean Ferguson, Merchant

This week the oilseed market saw the release of the StatCan report as well as the USDA WASDE. The WASDE pegged an overall lower production, crush, and ending stocks for the world oilseed complex. Lower production can be attributed to smaller overall production in Ukraine and Argentina – although the market is especially influenced by the developing weather and subsequent crop situation in Argentina. CBOT soy oil is down on decreased US export values, whereas the US balance sheet for meal is relatively unchanged, which has caused a recent spike in CBOT meal values. StatCan report shows Canadian canola stocks up roughly 30% on the year with exports up ~24% and crush up ~6%. Up to this point in the year, North American canola exports to China have been impressive, although the big wildcard going forward is if Chinese demand stays consistent or wanes as we go further into old crop. Canadian canola March futures are roughly 823 CAD, down 880 from the high to start the year. 

In the forex market, CAD has been steady on the heels of recent crude prices as well as trade being optimistic over future Chinese crude demand. Despite the steadiness of CAD recently, the Central Bank of Canada has been one of the only G10 Banks to put a pause on interest rate hikes. USD is weaker over higher-than-expected jobless claims; the US FED will be pressured into more of a dovish stance if unemployment numbers continue to rise.

SOYBEANS

Ben Hoggarth, Merchant

The PNW soybean program is all but over as cheap Brazilian beans flood the market. Domestic crushers and residual export business out of the US Gulf will control the demand narrative going forward. The South American story sounds like a broken record: Brazil’s soy crop is huge at over 150 million metric tons, but delayed somewhat due to excess rains jamming harvest and export logistics, and Argentina’s crop could shrink further due to a return of hot, dry weather following a brief respite of rain. The USDA cut its Argentine production estimate from 45 mmt in January to 41 in the February WASDE report, which is a step in the right direction, but far from in line with the latest estimate of 34.5 from the Rosario grains exchange. Old crop board prices have managed to stay near $15 or better for the month of February but could feel pressure as cash values cheapen in both US and South American markets. Overall carryout is still expected to be tight at the end of the year, but without exports to compete with, end users in the US will be content to let board and cash inverses do the work for them.

CORN

Joseph Foley, Merchant

Corn futures are down some 15 cents over the last two weeks, following much needed rains in Argentina and increasing focus on the lack of US exports due to cheaper prices in S. America and the Black Sea. Competition from these competing origins is likely to reduce this year’s exports to the second lowest level in the last ten years. Total export commitments for the crop year are 26.7 mmt currently, which trails last year by nearly 19 mmt, with Brazil, Argentina, and Ukraine picking up the slack. Still, Argentina’s crops (both corn and soy) are being adversely affected by hot, dry weather after (despite recent rains) and those production estimates are dropping. The USDA is estimating a corn crop of 45 mmt, but private estimates are 3-4 mmt lower.  Brazil’s corn crop, conversely, is forecast to grow to 125 mmt (vs. 116 mmt last year) and for the first time their exports of corn may exceed ours this year (50 vs. 49 mmt). Expect continued choppy price movement, as the market balances poor crop conditions in Argentina with the significantly slower export pace in the U.S. and larger Brazilian crop.The window for U.S. corn to be competitive for export should be in the March-June window, so that will be worth monitoring.