Morning Comments December 13, 2021

Bin sunset harvest

For the week last week, we saw March corn finish 6 higher, March wheat finish 18 lower, and January beans finishing basically unchanged as we work our way into holiday mode and folks move to the sidelines before year-end.

Looking ahead to this week, there is not much in the way of major news expected, leaving traders to look to outside markets for direction, though the outside markets seem to be lacking much in the way of direction themselves.

We find ourselves at a weird impasse from a global economic perspective as most of the major economies in the world are working to start limiting money flow to combat inflation, while China is starting to float the concept of stimulus to fight what appears to be a pretty severe economic downturn there.

We got confirmation on Friday that the country's major property developer Evergrande is in fact in default, with an estimated $19.2 billion in dollar-based bonds likely to go unpaid. With over $300 billion in overall debt, the company's failure is likely to have a long tail. 

Concerns over slowing growth, large developer defaults and the likelihood Omicron will be very difficult to contain once it reaches their shores has Chinese leaders worried over what the future could hold from an economic perspective. 

In addition to chatter over stimulus in China, we are also starting to see government officials there roll back blanket restrictions when it comes to energy use. To meet climate goals, the country had originally set forth blanket policies of energy limits, hoping it would force certain regions to work harder in limiting carbon emissions. However, more than anything it has resulted in a slowdown in industry and the economy as a whole.

Officials announced over the weekend that these restrictions will no longer be in place for the regions struggling to meet goals and that they will work to “prioritize stability” as we move ahead.

In other China news, grain traders continue to feel excited over Chinese feed grain demand as the country continues to soak up just about every cheap feed grain it can get its hands on. Reuters reported late last week that cargoes of Ukrainian corn, French wheat and Australian feed wheat had been purchased by the country. 

Many in the cash trade say this was old news, while others say it's only a matter of time before China turns to the U.S. for additional purchases. At this point, we still have around 394 million bushels of corn purchased by China but not yet shipped on the books, with around 5 or so million bushels having shipped each week the last couple of weeks. 

Traders continue to say we will see an uptick in Chinese shipments soon so we will continue to watch export inspections closely to see if that is in fact the case. 

Looking ahead, we will continue to watch the weather out of South America. Western and Central areas of Argentina saw some much-needed rains over the weekend, with the driest portions of Southern Brazil hoping to see some precipitation this week. Corn planting in Argentina has jumped to 62% on the week, while soybean planting is at 59%, both just slightly below the 5-year average.

As mentioned, we will get updated export inspection figures this morning at 11:30 Eastern, with all other attention likely turning to outside markets and continued geo-political conversations and COVID developments.

Corn down 3 to 4

Beans down 7 to 8