Keep an eye on the U.S. grain balance sheet as the new year begins

(Kara Oosterhuis/RealAgriculture)

When it comes to talking about markets, we focus on the uncertainties; things we don’t know. However, sometimes we need to focus on what we do know.

Peter Rohde, of IHS Markit, says what we do know right now is that we need to stay focused on the U.S. balance sheet, as it continues to drive what’s happening in the marketplace.

“We came off a year — the 2020/21 year with really low stocks on hand. But the 2021/22 crop? You know there’s a question mark there, and I think it’s something that I think the market may not be anticipating coming up in the final January reports that come out, that will state what the U.S. crop is,” he says, adding there might be a surprise coming in regards to where those numbers actually are.

Currently, Rohde and his team at IHS Markit have been working on their own survey in regards to acreage, while incorporating statistical data on comparing farms.

“Our latest report suggests that U.S. corn planted area is actually going to end up being closer to 994 million acres, which puts that crop up over 15.3 billion bushels. Soybeans, likewise, we’re calling those acres about 87.7 million, with a little bit higher yield, and a higher production number,” he explains. “It’ll really be interesting here over the next couple of weeks as we move into early January, and all the moving parts in the marketplace.”

When looking forward into the new year, we also can’t help but focus on the moisture situation, and how much rain is really needed to end this dry bias. As Rohde explains, the uncertainty will likely keep commodity prices high until we know more.

“Right now in our projections, we’re counting on yields close to what we call normal, but it takes some moisture, it takes subsoil moisture, and it takes some planting conditions come spring. So yeah, that situation is going to keep some prices elevated for some time,” Rohde notes. “We have to get well out into the 2022 crop growing season and get a real good feel for are we going to get a real increase in production? Are we going to see those yields? And we have to see that before prices start to start to decline. And so we expect these prices will will probably stay well supported for for the next several months.”

Check out the full conversation between Peter Rohde and RealAg Radio host Shaun Haney, below: