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.

Between freight snarls, currency headwinds, unfavorable weather and geopolitical tensions, grains are no exception that unfavorable conditions still continue.

Amid freight and trade disruptions, stockpiles are mounting in US grain bins. In its latest World Agricultural Supply and Demand Estimates report, USDA pegged corn ending stocks at 1.172 billion bushels, while soybean stocks landed at 200 million bushels, within pre-report estimates. Yields also look relatively healthy, with corn at 171.9 bushels per acre, within expectations, and soybeans at 49.8 bushels per acre, just below forecasts.

Cash corn and soybean prices are under pressure as Mississippi River levels near historic lows, hindering barge freight movement between Louisiana and Minnesota. As shipping capacity tightens, freight costs are rising, with downbound grain barge rates in St. Louis up more than 29% year-over-year in September.

While some shippers may pivot to rail freight, things aren’t clear there, either. In mid-October, a union representing roughly 12,000 workers rejected a labor contract brokered by the White House. A potential strike could further limit capacity and send rates even higher, making rail a less-likely option for grain movement.

Because it’s difficult to move grain to ports, exports have been dwindling. But freight issues aren’t the only obstacles cutting into outbound shipments. Last month’s 0.75-point increase in interest rates – the Federal Reserve’s third of that size in 2022 – bolstered the value of the US dollar to two-decade highs. Amid a stronger greenback – and rising inflation – export customers paying in dollars have less spending power when buying US goods.

Escalating conflict between Russia and Ukraine may also inhibit global grain shipments. Last month, Russian President Vladimir Putin threatened to limit Ukrainian grain exports, claiming that most of the shipments are landing in European countries with sanctions against the Kremlin. Russia also launched missiles against Ukraine in mid-October in retaliation for a blast on Russia’s Crimean Bridge.

As corn and protein prices face supply pressures, cottonseed prices are pressing higher amid severe drought concerns in Texas and potential hurricane damage in the Southeast. Meanwhile, already depleted forage inventories in the western half of the US aren’t offering relief in the short term. Prices are expected to remain firm for cotton byproducts, hay, and other fiber sources as dry weather persists in the West. Look for this to affect soy hulls and beet pulp for the coming crop year, as well. 

Favorable weather in South America may further bolster world stocks, which landed at 301.19 million metric tons of corn and 100.52 million metric tons of soybeans in the October WASDE report. New estimates by CONAB pegged Brazil’s new-crop soybean production at 152.352 million tons, up 21% on the year, and corn production at 96.277 million tons, up 12% versus prior-year levels. A La Niña weather pattern could bring dry weather to Argentina, but market chatter suggests adverse conditions have yet to impact the country’s crops.

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.

We appreciate and thank our sponsor partners in this report – CHR HANSEN & VETAGRO.