Morning Comments April 14, 2022

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The markets started the day weaker, testing new support levels before buying resurfaced, pushing May corn to close at its highest level since September 2012. On the day wheat finished up 9, corn was up 5, and beans were up 4. 

When it comes to overall fundamentals there is little in the way of new news hitting the market. We continue to watch what is taking place between Russia and Ukraine, though developments there are fleeting. Peace talks appear to be at a standstill, Russia is continuing to focus on capturing eastern territories and estimates when it comes to new crop production and export potential swing wildly by the day depending on who is issuing the newest analysis.

Interesting to note, Russian wheat was offered in the GASC tender yesterday coming in $20-$30 cheaper than other offers out of Europe. According to reports, Egypt bought the cheaper cargo of wheat in their basket of purchases but will be required to pay for it in rubles. 

Here in the U.S., traders are now debating just how aggressive the Federal Reserve will be when it comes to shifting their approach to monetary policy. Some feel that Tuesday's 8.5% CPI figure will be the highest we see, with the phrase 'peak inflation' being tossed about thanks to indications that durable goods and other components of core inflation are beginning to move lower. 

Peak inflation or not, U.S. Federal Reserve Governor Christopher Waller believes the U.S. economy is strong enough to handle an aggressive Fed policy to get consumer costs under control. The Bank of Canada must feel as though their economy is strong enough to withstand aggressive rate hikes as well, as they increased theirs a half a point yesterday to 1%, the largest such increase in over 20 years. 

On the cash grain side of things, ethanol production for the week was at its lowest level in over 2 months as scheduled maintenance and seasonal slowdowns hit. Stocks were down decently on the week as well, to their lowest level in 6 weeks, with a reduction in Gulf stocks showing decent export demand.

Cash traders are scratching their heads a bit as river freight values have fallen out of bed over the last week or so, trading nearly half of where they were a year ago. River freight values tend to give an indication of overall demand for grain movement into the Gulf, with weaker freight suggesting less demand than one would expect if exports were to be increasing from their current pace. Of course it could just be a blip in the normal flow, but it will warrant watching as we head further into Spring. 

Speaking of export flow, we will also want to monitor the ongoing trucker's strike in Argentina. The strike has significantly reduced the flow of grain to export ports, with the first round of government mediation yesterday failing to come to a resolution. Reports indicate current levels of stocks at export terminals remain more than adequate, though of course we will want to see an expedient resolution to avoid any disruptions to shipments.

Looking ahead, we will get updated export sales this morning with traders of course monitoring the detailed summary for any signs of additional business being done under the radar of export flash sales. Weather-wise, the National Weather Service’s 8-14-day outlook is giving an indication of a potential pattern shift, showing much needed above-normal temperatures and below-normal precipitation for the Eastern Corn Belt with above-normal precipitation in the west to finish out the month.

Corn up 2 to 4

Beans up 5 to 10