Morning Comments April 26, 2022

Grain Corn Pile Closeup

Corn was able to reject another leg lower yesterday, rebounding late morning and managing to close higher on the day as rumors of Chinese buying interest circulated yet again. Soybeans and wheat were able to recover much of their losses to close well off their lows as well. On the day we saw Chicago wheat finish 3 lower, with Minneapolis wheat up 15. July corn was up 9, while soybeans were down 12.

Indonesia clarifying its stance on Friday morning's announced palm oil export ban had soybean oil under pressure for much of the day, with the complex giving up much of its late week gains. While Indonesia's exports of refined palm oil products account for over a third of its total exports, the ban is likely to mostly impact less developed nations with an inability to process crude supplies. 

However, analysts feel a refined product ban will be difficult to maintain as well as storage in the country will likely be full of product within a month. With the Indonesian government now on move 8 or 9 when it comes to palm oil export plans, it is likely the industry and buyers will soon begin to ignore new declarations and continue to operate unfazed.

Interesting to note, the Malaysian Palm Oil Board announcing yesterday that countries around the world should consider pausing current and planned biofuel mandates until world vegetable oil prices stabilize. This is adding another voice to the growing noise surrounding biofuels and the renewed food versus fuel discussion.

As mentioned, corn managed to find solid footing after an initial sell-off when reports of Chinese buying made their way around the market yet again. China continues to send mixed signals, with officials announcing an even wider scope of testing in Beijing, planning on testing upwards of 20 million citizens in the city through the end of the week. 

While caseloads in Shanghai fell off on the day slightly from Sunday's peak, a discovery of a cluster of cases in Beijing has prompted fears of further lockdowns. Currently it is estimated over 50 million people are under lockdown, with millions of others seeing their movement restricted and receiving multiple rounds of testing. 

Domestic grain prices remain elevated and hog prices have found support after several rounds of consumers stockpiling in case of lockdowns has depleted short term supplies in some areas. With ships continuing to back up at Shanghai ports and slowdowns reported elsewhere, it may be difficult to see a big increase in physical imports, though having tonnage on the books in this market environment has been a solid play.

Some hedging of physical supply may come in handy as private meteorologists believe upwards of 40% of Brazil's corn areas may be experiencing drought stress, with limited moisture seen for the next handful of days. While much of the grain crop filling this stretch of dry weather is less than desirable, it appears concerns remain limited so far as those with boots on the ground still believe crop potential is solid. 

Here in the U.S., export inspections yesterday came in close to the weekly number needed for soybeans, with corn seeing a marketing year high for shipments. Wheat continues to lag the pace needed, shipping just over half the amount needed each week.

Crop progress figures released after the close showed 7% of the U.S. corn crop is planted, slightly below trader's expectations and the slowest pace since 2013. Soybean planting was below average as well, with wheat conditions falling to only 27% good-to-excellent.

While planting windows look to open this week precipitation-wise, cooler-than-normal temperatures are expected to remain in place through the first week and a half of May, at least. 

Looking ahead, we will be watching outside market moves and for signs of continued Chinese buying interest in grains. Markets are recovering across the board this morning with wheat, corn, and beans all higher. 

Corn 5 to 8 higher

Beans 10 to 13 higher