The never-ending supply of bearish U.S. demand news continues as the dollar is not expected to fall anytime soon, according to Jody Lawrence of Strategic Trading Advisors.
“High transportation costs on the Mississippi River cannot be absorbed by exporters and the premium will not be paid by buyers,” Lawrence said. “There is no quick fix to this problem as U.S. exports could suffer well into 2023 unless something dramatic happens.”
Last week’s rebound from the early lows was a welcome sight, but the lack of specific bullish news makes trusting the bounce difficult.
“Recent sales make me wish a larger percentage had been sold, but such is the plight of any marketing plan where you do not sell 100% at the highs,” he said. “The ongoing logistics problem needs to be resolved before spring planting as grain goes downstream but fertilizer goes upstream.”
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Lower projected corn and soybean yields were the main change to U.S. corn and soybean balance sheets in the October World Agricultural Supply and Demand Estimates report. Soybean yields were lowered 0.7 bushels per acre to 49.8.
“These declines follow larger yield reductions in the September report and bring total U.S. production for 2022 well below both initial expectations and last year’s crop,” said University of Illinois ag economist Joe Janzen.
In the WASDE report, USDA dropped corn yield 0.6 bushels to 171.9 bushels per acre.
The declines follow larger yield reductions in the September WASDE report and bring total U.S. production to well below both initial expectations and last year’s crop. Current yield projections put production down 8% for corn and 3% for soybeans relative to the 2021 crop.
Natural gas prices have lost nearly half their value over the past two months, falling to seven-month lows, as domestic producers increase production, according to Lawrence. He believes farmers may benefit.
“Not only will that lower your heating bill this winter, it will also help lower fertilizer production costs, which is allowing fertilizer prices to start falling as well,” he said. “Although river transportation issues remain, falling fertilizer prices are helping bring 2023 production costs down to more manageable levels.”