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319770

Inflation tops all market news, analyst says

The huge inflation impact on commodities is very prevalent, analyst says.

In the past two weeks, the December corn futures market has added 40¢ per bushel, with Dec wheat up 52¢, and Mnpls wheat up a $1.  

Inflation is a big, big deal in markets - and there has been a lot of talk about it lately.  

Inflation has gone from 1.4% annual rate when Trump left office, to over 4× higher at 5.9%, within the last nine months. 

Do not miss this important fundamental. It may explain 80% of market movement in the next year. With fertilizer inflation over 100% in most products, that’s why corn and wheat are rising fast while soybeans are not.  

Weather Outlook

There’s some light rain/snow falling in parts of Colorado and Kansas, and light rain in parts of eastern Kentucky, Tennessee, and the East Coast. Other than that, it is a relatively dry forecast the next 14 days, with below-normal rainfall in the coming week, but slightly wetter (below normal to normal) precip in days eight through 14.  However, temps remain above normal for the coming two weeks in the northwest two-thirds of the United States. Only the Southeast will see below-normal temps and normal to below-normal precip the coming week.  

Final insurance prices for corn were $5.37 vs. $4.58 Feb. price (up 17%), and soybeans $12.30 vs. 11.87 Feb base (up 8%). StoneX, the private analyst firm, released its estimates for the November 9, USDA report. Nov. yields are higher with corn 177.7 bu (up 100 mb) and soybeans 51.9 bu (up 50 bu). Export commitments, so far, are down 37% soybeans and 22% corn vs. last year.  So, combined with larger yields and slow exports, the grains could have some more negative news in the USDA November report. Still, oats, HRS wheat, and cotton are roaring higher along with crude oil, and dragging corn and soybeans higher in spite of worsening fundamentals.  

Of course, inflation is the common thread in all commodities right now, and the expectations of traders seems to be that inflation will become somewhat out of control in the U.S. Usually, rallying commodities across all types indicates rapid inflation is coming, and that is exactly what the markets are telling us right now.  

Improving Soils

Corn harvest is 74% complete (8% ahead of normal), with soybeans 79% harvested (2% behind) in this week’s November 1, 2021, Crop Progress report.  Sorghum is 80% harvested (10% ahead), sugar beets 87% harvested (3% ahead), and winter wheat is 87% planted (1% ahead of normal). Winter wheat is rated 45% G/E (down 1% this week), but still above last year’s 43% rating. Perhaps more significant is topsoil moisture gaining 6% to 71% rated adequate/surplus (vs. 62% last year), and subsoil also up 6% to 64% rated adequate/surplus (vs. 56% last year). The U.S. is in much better shape going forward to 2022, as much of the northwest Corn Belt soil moisture levels have been restored this fall.   

But once again, inflation tops all the fundamental news, at least this week. Even though many fundamentals point down, the huge inflation impact on commodities is very prevalent. Perhaps that makes sense when one looks at the dramtically higher prices of fertilizer for the 2022 production year.  

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Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country.  See http://www.progressiveag.com for rankings and link to data from Top Producer Magazine and Agweb.com. 

For the raw, unedited and accurate version of Ray's editorial commentary, email joan@progressiveag.com.  

This material has been prepared by a sales or trading employee or agent of Progressive Ag Marketing, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Progressive Ag Marketing's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. 

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The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Progressive Ag Marketing believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that advice we give will result in profitable trades.

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