Weathering the 2020 Storm

Grain Weathering the 2020 Storm

Justin Huebner, Grain Division Manager & Financial Services

Predictable has never been a word used to describe the ag markets. The many factors affecting supply and demand change daily, especially in 2020 navigating what we hope will be a once-in-a-lifetime event.

Estimates expect to have lost three to four months of ethanol demand and with production currently running at 76 percent capacity, we can expect to see an impact on prices for a while. China is currently behind the pace to meet their obligations according to our trade agreement, though they purchase mostly new crop soybeans so we expect there to be large purchases made later this fall. If ethanol prices are cheap enough, they may take the opportunity to purchase ethanol to meet their commitments. Ethanol, being a cleaner and more economical fuel, would certainly benefit China.

Spring was pretty good to us, many were able to get in the fields and plant early. As of June 29, the USDA rated 73 percent of the corn crop in good or excellent condition, and 71 percent of soybeans in good or excellent condition. With the favorable planting season this year, 40 percent of the crop is expected to pollinate at the same time, which makes the first three weeks of July a critical pollination window that could make or break this year’s production. Moisture for the beginning of July is still looking good, but meteorologists are predicting a La Niña event for later this summer and expect late July and August to be hot and dry. Even in all the uncertainty of this year, the one constant is that we are still playing the weather game.

If the weather holds and crop conditions continue along the same trajectory, we could be looking at a record crop year. The best course of action for now is to be a little more aggressive on marketing old crop and taking advantage of market rallies when you can.

Weathering the 2020 Storm