Morning Comments January 3, 2022

Corn closeup

The first overnight market of 2022 is proving to be a stout one as all major grain markets (and soybeans of course) gapped higher on the open and as of the time of this writing, haven't looked back. 

Though many were expecting some level of volatility to close out 2021 late last week, the markets did very little. Wheat was down a bit on expected moisture in portions of the Southern Plains, while corn and beans closed on either side of unchanged. 

Interesting to note, on the week last week January beans saw a 52 cent range, basically making a round trip to finish down 3.

Weather forecasts continue to look to improve for portions of Southern Brazil, with Parana and Santa Catarina seeing increased rain this week, and a wetter shift in the pattern seen in 2-week model runs as well. Though not often discussed in recent dryness concerns, Paraguay is also expected to see a shift to above normal moisture.

This shift should help stabilize production, especially in the areas where crops have just been planted.

Argentina remains a concern, though some forecasts indicate more rainfall could be expected in Western and Central production areas. Temperatures are likely to remain above normal though, making any rain that does fall absolutely critical. It is important to remember around 30% of Argentina's total corn production was planted early and is working its way towards harvest, with the majority of production going into the ground in late December. 

Soybeans were just recently planted as well, this making January and February rains far more critical for production than in some areas to the north.

As we discussed late last week, Argentina crop conditions fell hard week over week, with the amount of corn rated good to excellent falling to around 58%. Again, this rating is higher than average for this time of year, but with the market looking to buy any kind of bullish story, we're seeing chatter about Argie crop conditions continuing to make its rounds.

On the flip side, some folks are saying too much moisture in the Northern portions of Brazil are causing crop damage and delaying harvest. Of course, with these areas planting beans in a tropical climate and harvesting them during the peak of monsoonal moisture this seems to be a story that circulates every year around this time, and the farmers in the area seem to manage well.

Early yields out of Mato Grosso continue to point to a massive crop coming off there, with reports of 70+ sacs per hectare, which roughly equates to that many bushels per acre when it comes to back of napkin math.

In other news, folks are continuing to struggle with what Omicron and a surge in global Covid cases means to everything. We're seeing waves of cancellations impacting air travel, with thousands of flights canceled each day last week and over the weekend. 

We saw Goldman Sachs push their return-to-work date back a couple of weeks, while school districts across the country are finding themselves back to virtual learning as they struggle with staff illness and quarantine requirements.

Folks want to be optimistic this wave will be short lived, and if South Africa--where Omicron was initially discovered--is any indication it should be, though some claim different environments and societal trends (age, access to healthcare, etc.) make for a less than clear outlook.

Looking ahead, we will get updated export inspection data this morning at 11:00 a.m. Eastern. We will continue to look to corn shipments to see any indication of China picking up shipment slack there. Export sales continue to run ahead of average pace, though much of that is thanks to the big Chinese purchases seen last May. With us needing to average around 56 million bushels a week, we definitely need to see an uptick from the 25-30 million bushels we have been shipping.

Bean inspections will be important as well as many traders feel our export window is all but closed. Current comparisons make Brazilian beans 30 cents or more a bushel cheaper in the short-term, with the discount working towards 50 cents March forward.

Today is a bit of a mixed day with some businesses closed for the second day of the New Year's holiday, while others will be back in full force. 

Corn up 7 to 8

Beans up 18 to 20