Morning Comments January 24, 2022

Corn For Grain Advisors Invite

Soybeans and wheat finished the week slightly weaker Friday, as nearby corn continued to move to the high side, trading to its highest level seen since early June. 

Just what traders are focused on at any given moment seems to shift to a certain extent, as we have what seems to be, from a fundamental standpoint, a greater amount of unknowns laid out in front of us than we've seen in quite some time.

With heavy rains replenishing a good amount of soil moisture at least in the short term throughout much of Argentina and Southern Brazil, we now turn our attention to Northern Brazil and early harvest yields. Locals continue to contend that yields are good to excellent across much of the northern portion of the country, with early yields in southern areas extremely poor.

As the soybean crop comes off, many farmers in the area are racing to plant second crop corn or cotton in a nearly ideal timeframe with at least another 3 months of moisture expected from monsoonal flow. 

Forecasts for Argentina continue to show rains this week, with conditions turning off drier in the 8–14-day time period, though severe heat is not expected to accompany the dryness this time around. Meteorologists continue to struggle a bit with the forecast beyond the 14-day time period, as mixed atmospheric and oceanic conditions remain in the face of a weakening La Nina.

Outside of weather, we continue to monitor what is taking place between Russia and Ukraine. Both the U.S. and UK have instructed diplomats and their families to leave Ukraine, with U.S. officials saying the situation could deteriorate at any moment and that they aren't in any position to stage rescues if it were to. Ukrainian officials called the move premature. 

Meanwhile, Putin continues to say he has no intent of an invasion or an incursion so long as the West takes his requests seriously. 

Other geo-political turmoil will have to be watched closely as oil bulls point to Middle Eastern conflicts, with Yemeni rebels continuing to fire missiles in the region. Many fear they will start to target UAE oil production, creating further supply disruptions.

Not to be outdone, China sent 39 warplanes into Taiwanese airspace in response to U.S./Japanese military exercises in the region. This push of power was the largest we've seen since last October. 

Looking ahead, we will get updated export inspection figures this morning. With trouble along the river and railroad system due to both weather and Covid, we are seeing some extraordinary things happen in the cash market. These developments have pushed the nearby corn spread to an inversion and are keeping export basis bids incredibly firm, though much of the gains in values are being eaten by transportation costs.

In any event, we should continue to see a sharp uptick in corn shipments as that program takes over the bulk of elevation from this point forward.

Outside markets are reeling after what was the worst week for global equities since the start of the pandemic, and traders are starting to look to the sidelines ahead of Wednesday's Fed rate decision and press conference. 

Market watchers are pricing in a March hike with four total expected this year. However, others feel that with the current pace of inflation, more may have to be done to cool cost increases. 

Do your best not to get caught up in day-to-day market moves, as volatility is likely to increase with more money flow and far greater uncertainty. Keep points of profitability in mind and do your best to use scale selling and target orders when it comes to making selling decisions.

Corn down 3 to 4

Beans Down 5 to 6