Morning Comments July 22, 2022

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The markets started the day weaker yesterday, tried to recover midday, but fell off hard into the close on talk of a Ukraine/Russian grain shipment deal being signed today and wetter forecasts. To end the day we saw wheat down 13, December corn down 16, and November soybeans down 30.

According to officials from all four parties privy to negotiations and developments, a grain export deal will be signed by both Russia and Ukraine today in Turkey. Details on the deal are just becoming clear, with obvious roll backs of sanctions on banks and cancellation of UAN import duties into the US appearing to be enough to get Russia to concede and allow shipments.

The deal appears to cover three ports, Odesa and two additional Black Sea ports close by, with 80 ships estimated to be waiting currently. Shipments will likely be able to resume much quicker than initially expected as Ukraine does not intend to demine ports, but will instead help grain ships navigate through known minefields.

In addition to a Ukrainian naval escort, ships will be inspected as they enter straits in Turkey before proceeding into the Black Sea. Officials believe the reopening of ports will facilitate the shipment of nearly 25 million metric tons of grain they claim is currently trapped in the country, weighing heavy on farmer prices.

In addition to talk of grain corridors being opened, we are seeing further signs of concern when it comes to the European economy. Overnight we saw data showing German economic activity dropping unexpectedly in July giving even more indications Europe's largest manufacturer is facing major financial headwinds. The European Central Bank raised rates 50 points yesterday, its first rate hike in over 11 years, in an attempt to cool runaway inflation.

Here in the US, export sales data yesterday was very poor for corn again on the week, with sales running at only 10% of the amount needed to meet current USDA expectations. Soybean sales were surprisingly stout for the week after big cancellations were seen a week ago. Wheat sales were strong again, though lower than the massive sales figures we saw last week.

Speaking of wheat exports, after all of the fanfare regarding Egypt's state wheat buyer looking to source wheat from outside Russia or Europe, with offers from the US specifically targeted and then turned down, we got news yesterday that Egypt had directly negotiated purchases of over 600,000 metric tons all coming from Russian or European sources.

Looking ahead, we will be watching closely to see if anything in the weather forecasts changes as it currently looks as though the pattern will shift from hot and dry to warm and wet across much of the Corn Belt through the start of August. What happens after remains in question, but outlooks currently look conducive to a decent start to the final stretch of the production year here in the US.

Markets are again starting the day weaker, with wheat down over 20 cents but firming slightly at the time of this writing. After falling off hard on the week many traders might be looking for corn and soys to stabilize ahead of the weekend.

Corn down 2 to 5

Beans up 2 to 5