Welcome to the new The D&D AG MarketMIX newsletter! This newsletter is exclusively for you - our D&D customers and associates. Our goal is to provide you with a monthly summary of the Ag market reports to keep you updated on relevant, vital news that may impact your business.

Grain & Feed Markets Show Strength

Grain and feed markets found renewed strength following the latest World Agricultural Supply and Demand Estimates report, in which the USDA tightened US balance sheets for corn and soybeans.

A surprise 2% reduction in harvested corn acreage helped offset a reduction in export projections, and soybeans saw an unexpected cut in yields. Futures markets rallied on the news. The January report finalized production statistics for the 2022 US crop, so now all eyes will be on demand for US products until we determine planting projections this Spring.

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South American Drought Still a Concern

South American production will also attract attention in the weeks ahead. Dryness in Argentina remains concerning for yet another crop season, and the WASDE report confirmed market sentiment about the region.

USDA took Argentine corn production down 5% and lowered soybean production estimates by 8%, providing further support to pricing. As Chinese demand for South American product increases, Brazil will need to make up for any continued losses from its neighbor in order to keep global balance sheets in check.

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Chinese Demand Still Remains Uncertain

While demand for US exports typically decline seasonally at this time of year, Chinese demand remains uncertain as the country works its way out of COVID lockdowns for the first time in three years. It’s also unclear how much China wants to diversify away from US grains given the political tensions surrounding Taiwan and the risk of trade disruptions. Global balance sheets remain healthy but there’s not a lot of wiggle room. The big unknown: South America’s ability to satisfy global demand until the next US crops hit the market later in 2023.

The Future of Renewable Fuels

The EPA will spend part of February hearing public comment regarding its draft proposal for renewable fuel blending standards. The December draft included higher inclusions of alternative oils such as canola and animal fats. Managed money positions and futures values point to a market desire for greater soy oil inclusion and higher meal production when the final draft emerges in late February or early March.

Rain on U.S. West Coast Could Mean Spring Flush

Torrential rains on the US West Coast are creating chaotic conditions while also bringing much needed relief to drought-stricken California and its neighbors.

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Milk production is likely to suffer in the immediate aftermath. But reservoirs are filling and snowpack is well ahead of normal rates, setting up a potential spring flush of forage better than has been possible in the last several years. The possibility of better fiber availability in local markets should allow for some price relief across the country this spring in commodities such as soy hulls, beet pulp, alfalfa, and grass hay.

Protect Your Downside

Given current market conditions, the Ever.Ag Feed Foundations Team recommends putting strategies in place to protect your downside. If you’re locking in high prices, consider buying inexpensive puts underneath. Please contact Jordan Miller or Pat Kahle who can direct your questions to the appropriate advisor to discuss specific strategies.

Jordan Miller: 419-692-3206 ext. 1043

Pat Kahle: 517-260-8295 or P[email protected]

This monthly report is brought to you by Ever.Ag’s Feed Foundations Team. The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. By law we must state the information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.

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