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Market Trends Report – January & February 2022

US and the World

     It is a new year and with it comes all kinds of new realities. Farmers across the Great North American corn belt are re-calibrating and planning for the new year. One thing that we know is change is our only constant in 2022 things will surely be different than 2021. That being said, we need to look back at what 2021 has taught us and apply that to the many issues we may face in our marketing in 2022. There are a myriad of possibilities ahead. There certainly will be many marketing opportunities as well.

     On January 12th the USDA released their “final” numbers of the 2021 crop year.  The January report is always one of the biggest reports of the year, but this year was uneventful.  On January 12th the USDA pegged US corn yield at 177 bushels per acre which means it is a record slightly above the 2017 record of 176.6 bushels per acre.  Total corn production was 15.115 billion bushels.  USDA also increased the corn ending stocks by a mere 47 million bushels to 1.54 billion bushels.  This was compared to 1.493 billion bushels in December. On the demand side of the ledger ethanol usage was increased by 75 million bushels to 5.325 billion bushels. Food and residual demand remained at 5.65 billion bushels with total domestic usage at 12.41 billion bushels.  The USDA lowered Brazil’s production  to 115 million metric tonnes and Argentina production to 54 million metric tonnes.  Ukraine was tagged at 42 million metric tonnes.

      On the soybean side of the Ledger the USDA increased average soybean yield for the 2021 crop up slightly to 51.4 bushels per acre.  This was still below the record yield of 52 bushels per acre.  However, soybean production was pegged at 4.435 billion bushels which was up 10 million bushel from the December estimate putting it into record territory. The soybean domestic ending stocks were pegged at 350 million bushels which was up 10 million bushels from the December report.  Globally, soybean stocks were down as USDA trimmed Brazil and Argentinian production.  Brazil soybean production was cut to 139 million metric tonnes and Argentinian production was down to 46.5 million metric tonnes.  USDA left wheat production unchanged from December at 1.65 billion bushels.

       On January 16th, corn, soybeans futures were higher than the last Market Trends report.  Wheat futures were lower.  March 2022 corn futures were at $5.96 a bushel.  The March 2022 soybean futures were at $13.69 a bushel.  The March 2022 Chicago wheat futures closed at $7.41 a bushel. The Minneapolis March 2022 wheat futures closed at $8.95 a bushel with the September 2022 contract closing at $8.70 a bushel.

     The nearby oil futures as of January 16th closed at $83.82/barrel up from the nearby futures recorded in the last Market Trends report of $71.67/barrel. The average price for US ethanol on January 14th in the US was $2.25 a US gallon.

     The Canadian dollar noon rate on January 14th was .7971 US, higher than the .7865 US reported here in the last Market Trends report. The Bank of Canadas lending rate remained at 0.25%.


     In Ontario, freezing weather and a lack of snow cover in some areas has helped the last few fields of soybeans and corn to come off.  It has been an incredibly mild winter up until this time with a lack of snow cover especially in the deep southwest of Ontario. Frigid temperatures in mid-January are certainly welcome not only to aid harvest conditions for the few fields left out, but also to fracture heavy soils after a wet fall.

     Ontario corn and soybean basis has been status quo to lower over the last month reflecting some of the changes in foreign exchange as well as market conditions across North America.  Basis levels have been strong versus historical averages, but looking ahead it is difficult to know where this goes.  Some Ontario ethanol plants have pulled their bids citing Covid concerns, but at the same time they have wide coverage going forward. 

     Ontario farmers might be asking themselves why cash prices have been maintained at high levels even though we have record crops this year in Ontario?  There certainly would be many answers to that question, but one is our reflection of price has a lot to do with replacement values across the border which are also high.  It’s simply unusual to have record crops on both sides of the border and have high prices where they are.  It is given Ontario farmers great marketing opportunities this past fall and winter for both old crop and new crop.

     Old crop corn basis levels are $1.20 to $1.45 over the March 2022 corn futures on January 16th across the province.  The new crop corn basis varied from $1.05 to $1.28 over the December 2022 corn futures.  The old crop basis levels for soybeans range from $3.05 cents to $3.14 over the March 2022 futures.  New crop soybeans basis levels range from $2.51-$2.85 over the November 2022 futures.  Ontario SRW wheat prices are in the $8.33 range with new crop for next year currently fluttering near $8.72 across the province.   On January 14th the US replacement price for corn was $7.81 /bushel.  You can access all these Ontario grain prices in the marketing section at

The Bottom Line

     You could almost take a pass on the January USDA report this year. That’s a bit surprising as usually this report causes great volatility in the market.  However, if you dig deep that lack of news reflects the dynamic demand for agricultural commodities over the last several months. Prices historically are high and ending stocks for corn, wheat and soybeans are lower than they usually are.  In this farming business we are surprised every day, and maybe no news in the January 12th report is the surprise.

     South American weather is dominant regarding fundamental news for our market prices at the present time. We all know that we’ve had extremely hot weather in Argentina and southern Brazil, and this is resulted in a cut in production from the USDA. It is likely that this cut in South American production will be even more in the February USDA report with more recent data. Keep in mind, it’s not only about the drought in South America, but it’s also about how that will affect planting conditions there moving forward.

    For instance, at the present time we have lower US and global corn stocks than we’ve become accustomed to at price levels which are unusual for January.  While it is hot and dry in southern Brazil and northeastern Argentina, it is good conditions in northern Brazil. However, if northern Brazil receives untimely rainfall during harvest, it delays the Safrinha crop being planted, which could result in less corn production. This would be an aside from the lower corn production already predicted to come out of Brazil and Argentina from the USDA.

    What this means is there are a lot of moving chips on the poker table of grain prices as we move into the early part of 2022. Clearly, the South American weather dynamic is the big one, but there also is the specter of getting enough corn and soybean acres in the United States this year depending on what happens in South America. Demand remains strong amid this global Omicron affected economy.  

Commodity Specific Comments


     Corn prices are dynamic as we sit here in January of 2022. Often times, we see a seasonal price swoon in corn and soybeans in the last week in January. However, we have good prices now. Keep in mind that we have increased corn production by a billion bushels over the last two years and doubled the corn price. It is a new day.

     Historically speaking, corn prices are rarely this high in January. In fact, if you go back, 2013 might be one of those years but we were on the way down at that time.  The stars have aligned this January to put the price of corn where it is and even though there is potential to go higher in 2022, taking some risk off the table now and backing that up with July call options wouldn’t hurt anybody.

     The March 2022 corn futures contract is currently priced 3/4 of a cent below the May contract which is a bullish indication for corn demand. Seasonally, corn prices tend to peak in early June and bottom out in early October. The March 2022 contract is currently priced in the 67th percentile of the past five year price distribution range.


     Soybeans have been the golden child over the last 18 months, but that may now be turning to corn, which is seen as slightly more bullish depending on a myriad of factors. However, keep in mind as we move ahead South American weather remains key to that dynamic at the present time and it’s been incredibly hot in northeastern Argentina and southern Brazil. At the same time, the weather has been good in northern Brazil and this dynamic will continue to buffet soybean prices into February.

    There is also the discussion of 2022 soybean acres which will surely start to affect our soybean futures prices. With high fertilizer prices does this mean that there will be more soybeans planted in the United States in 2022. This could be mitigated by 2 million more wheat acres already planted in the United States and possibly more cotton acres also being planted in the spring. This is a moving target which will surely affect prices moving forward.

     The March 2022 soybean contract is currently priced 9 and a half cents below the May contract which is considered bearish. Soybean prices tend to peak in early July and bottom out in early October.  The current active futures contract which is March is in the 66 percentile of the past five-year price distribution range.


     Wheat prices have been on a deep dive over the last month and of course the question is why? You might make the argument that wheat went up too far and too fast last year and we’re coming down to reality. However, wheat prices tend to go up in the last two weeks to January.  The nearby March Chicago wheat futures contract is in the 71st percentile of the past five-year distribution range, which is still very good but down from the highest prices that we’ve seen in the last nine years.

     In Ontario, the wheat acres in the ground are in flux as conditions were highly variable when they were planted. For instance, in the last Market Trends report 750,000 acres were mentioned as planted.  This might be significantly lower come spring as planting conditions in southwestern Ontario were very tough but on the other hand in eastern Ontario it was set up well. Cash wheat prices have dropped in Ontario as well, but still reflect values that are quite profitable.

The Bottom Line (cont.)

    The Canadian dollar has been an unwanted guest at the Ontario grain price party over the last 3 weeks. It has gained almost three cents against the American dollar during that time reaching 80.25 just after the New Year.  It is always difficult to decipher exactly why this happens as typically it moves in an inverse fashion to the US dollar.  However, simply put, Ontario farmers need to appreciate the Canadian dollar volatility at times can be violent as it was over the last three weeks which has a huge effect on the cash price for soybeans and wheat. The great challenge will remain balancing that versus futures price levels. That’s nothing new, but the last three weeks have been a laboratory for why that is important.

    The US dollar has in fact been the inverse to the Canadian dollar over the last three weeks. It will also hold the key to future price movement as the lower U.S. dollars always helps those futures prices. It goes without saying that an interest rate hike both from the US Federal Reserve and the Bank of Canada will be a stimulus for a higher U.S. dollar in the future. This is likely in 2022.

     Is it, was it, is it again time to take price risk off the table?  Keep in mind you can always sell the physical grain and buy July call options for instance in the corn market if you wanted to stay in. However, keep in mind also that farmers aren’t really speculators, but more risk management hedgers. Demand for agricultural commodities is extremely dynamic where we are in 2022. Ethanol demand is strong even though it is dropped off over the last week or so but expect it to regain some steam in the warm weather months when driving will be more prevalent. We also have all those geopolitical concerns regarding Russia and Ukraine as well as China.

     The challenge for Ontario grain farmers is to put it all together.  In January of 2022 grain prices are good, but the stars need to be continually aligned to keep that going. Inflation is what it is and it’s having an effect too.  The Omicron variant of COVID continues to challenge us in Canada and our supply related constraints will likely continue.  It’s time once again for daily market intelligence as we move ahead. This is hard because there are so many moving parts to this agricultural commodity price equation, but you need to try. There will be many marketing opportunities ahead, it will be important to manage your risk accordingly.