Our operation is moving at a crawl right now. We have received nearly two inches of rain since our last report, and as a result very little is happening. I was able to get the vast majority of my planned soil sampling completed two weeks ago before the rains started. It was warm and windy for a few days, and the top of the soil was finally dry.
The soil cores, however, told another story. Beyond the loose dry dirt at the surface, it was still mainly mud just underneath it in most places. More moisture remains in the forecast, and I don’t expect we will have a window to do anything in the field until early April at the soonest. In the meantime, I will be gathering in chemical and seed inventories, so we are ready when Mother Nature is.
As the markets and economy measure the toll from virus-related shutdowns, I am hopeful that the relatively small drop in grain prices to date (versus stock markets and other financial assets) is a sign that underlying demand for grains will hang in there. Ethanol demand will certainly drop as economic activity slows, and that will likely impact corn usage. Perhaps soybeans and wheat will have more tailwinds, as feed usage has the potential to keep both products moving, and the weakening dollar can make exports incrementally more attractive to foreign customers — assuming that we can continue to make overseas shipments in the near future. It is also possible that while futures contract prices remain relatively steady, basis could collapse as the hindrances to domestic and foreign trade make physical movement slow and difficult. This whole situation may be necessary and painful, but hopefully also transitory.
Local basis levels: corn +0.01, soybeans -0.38; and hard red wheat -0.15. — Ryan Johnson