Commodity Comments

Brody Padgett, Commodities Manager

It seems that for the past several years it’s been one challenging time after another, and so far 2022 hasn’t let us down in that regard. As I type this, corn planting in our area has largely come to an end (one way or another) and we still have most of the soybean acres to get in. The abnormally wet and cool spring has led to planting delays and local corn acreage that will likely be 10-20% less than producers had intended to plant. Tight domestic corn supplies, South American weather issues, and the Russian invasion of Ukraine have led to price and volatility levels not seen since 2012. Only a few years removed from sub $3 corn, we’ve already seen corn futures trade well over a two dollar range year to date, with cash prices topping out at just over $8 per bushel.

Given the volatility in price, CVEC management and the CVAC board have again tried to be as aggressive as possible with the 3rd trimester advance price set at $6.50 plus storage and equalization while trying not to overpay and create a scenario where we’d have to have a negative price adjustment.

However, the board is again committed to reviewing the advance price on a monthly basis and will adjust it higher if prices were to trend back towards the market highs seen earlier this spring.

Locally, CVEC production and margins have been outstanding this year and I believe we will continue to add to our profits as we move through early to mid-summer, but corn availability is likely to be a challenge by the time we get to late summer and early fall. Strong processing margins, good export demand to both the PNW and Canadian markets, and a smaller old crop production will likely lead to Minnesota posting the lowest carryout stocks level seen in the past twenty years. The challenge of bridging the gap between old crop and new crop corn supplies will obviously be made even worse by the late planting and slow start to the growing season, leading to what will likely be a late October harvest start given normal growing conditions this summer. Demand for ethanol remains strong however so I am hopeful that margins will remain at profitable levels even in the event that corn values were to move higher from here.

Please feel free to call with any questions specific to shareholder delivery, or to discuss the various contracting options available to CVEC. Also take note of the new Flexible Pricing Program outlined in this newsletter. Stop in the office or call Sara or myself to walk through how this new program may fit your individual operation’s marketing plan.

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