It’s grow time. April is always the start of everything exciting in agriculture. Every weather report, every USDA report, and every news story will be scrutinized. Traders will swing the market this way and that. Farmers, start your engines!
Today the USDA released their S&D report which the market seemed to disregard. In my opinion, the most important number is the World Ending Stocks. The only question that needs to be answered is did they go up or down. Today, the report said the following: Corn Up to 305.45 MMT from 292 in 2021; Wheat is down to 278 MT from 290 MMT and soybeans are down to 89 MMT from 103.11.
Just for fun the world total grain ending stocks are at 797.47 MMT DOWN from 798.99 in 2021 and 815.18 MMT in 2019. (grains does not include oilseeds). The world oilseed ending stock are as follows. 106.41 MMT DOWN from 117.56 in 2021 and 114.09 in 2019.
Why This Matters
The real reason why world ending stocks matters is because it tells us how much grain is left over at the end of the year. If there is less than last year it means that overall supply is shrinking. If the supply is shrinking that is a bullish signal.
What we need to do is figure out the projected world ending stocks. Will they be getting smaller or larger in the next 6 months? If you believe that overall global supply is going to shrink, then pre pricing grain should be smaller than larger.
Bulls and Bears
There are two major things that need to be addressed.
One: Supply chain issues. Depending on the situation and location this could be bullish or bearish.
Two: Global financial / political situation. At this point anything could happen. The market could double in 6 months or be cut in half. There is so much happening right now these extremes are possible. Remember 2008.
Bottom line: Effective grain sales is all about risk management. There is simply too much going on in the world right now to make sense of what is actually going on. If you need help with marketing your grain give Greg a call 403-782-5488
Wheat has been the best performing asset since 2020