Morning Comments September 28, 2021

Sillouette Harvest Sunset

The markets are a touch weaker this morning after corn was up big yesterday. 

There was some talk yesterday that the first true shift in policy towards China demonstrated by the Biden administration could possibly help encourage an increase in grain demand. Over the weekend the Biden administration dropped its extradition request for the Hwawei executive who had been sitting in Canada for the last two years. Some folks thought this gesture would turn into some goodwill purchases, though many remain unconvinced that's why corn was higher. 

With absolutely no indication of any such thing happening on the cash side, many other market watchers would venture yesterday's move was simply a case of buyers showing interest in a commodity that had been mostly sitting sideways with lower volume allowing the move to be amplified. 

Export inspections continue to show reduced capacity and movement out of the Gulf, though we are working to get back to normal, it appears as bean exports were the largest seen in three weeks. However, at only 16.2 million bushels shipped on the week we now have to average 42 million bushels of soys shipped a week to meet current USDA export inspections.

We did get confirmation of business done late last week with a 334,000 metric ton flash sale announced to China yesterday morning as well though, showing they are still in the market securing nearby supplies.

Speaking of China, part of the run up in yesterday's corn prices could have been influenced by chatter that Chinese fertilizer companies have been instructed by the government to stop phosphate exports through the end of the year into 2022. China supplies 30% of the world's phosphate market, with much of the demand coming from Australia. 

The idea that the reduction in available fertilizer supply, not to mention the significant increase in cost will reduce global corn production is being fiercely discussed around the globe as traders fully believe farmers will change rotational intentions and lean more heavily on bean production as a way to work through the pinch. 

We're a long way from next Spring, but this will definitely be something we continue to monitor and discuss.

Down in South America, the start to the rainy season has come on a little bit slower than expected though most meteorologists feel this year will be much more normal from a precipitation standpoint than last year. So far, planting pace of soybeans in Brazil is around 1%, which is in line with averages. 

The much earlier start to planting this year versus last could push Brazilian soybeans into the global pipeline some two months earlier than we saw this past Winter. Of course, the crop isn't even planted yet, but the current trader estimate for production is around 144 mmt or 5.3 billion bushels, this versus the current expectations for the U.S. crop of 4.37 billion bushels.

Harvest progress in the U.S. came in relatively close to expectations with corn 18% harvested and beans 16%. This week's forecast looks dry just about everywhere outside of the Southern Plains so brisk progress should continue.

Looking ahead, we don't have much in the way of scheduled news set to be released today with most traders turning their attention to squaring their position ahead of Thursday's Quarterly Stocks report. 

Corn steady to 1 higher

Beans 3-4 lower