Play Turner's Take Ag Marketing Podcast Episode 296

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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!

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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.

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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.