Morning Comments June 16, 2022

Challenger1000 Series Tractor Planting

Markets were mostly mixed yesterday as we continue to monitor what is happening in the outside markets and try to extrapolate what that may mean for commodities. At the end of the day we saw July wheat in Chicago close basically unchanged while KC and Minneapolis markets were down 7-9 cents. July corn closed up 5, with December unchanged, while July beans were down 5, with November down 2.

Though a 75 point increase in rates for June was nearly entirely off the table at the start of the month, the fresh inflation data received last Friday created a need for the Fed to be more aggressive. The 75 point increase in rates seen yesterday was the largest one day increase since 1994, with Fed Chair Jerome Powell indicating another 75 point increase in on the table for July, with 50 points expected in September.

Thanks to a series of leaks and whispers ahead of yesterday's decision it was nearly certain a 75 point increase would be announced. There was some additional talk we could see a 100 point increase as the Fed has to work to regain the confidence lost by using the term 'transitory' to address inflation concerns and waiting so long to change its approach to policy.

Outside markets actually rallied after the announcement as the answers Powell gave at the post-decision press conference spoke highly of our current economic strength and the expectation of continued strength. While the idea of a soft landing has been all but removed, many feel the US remains in a good position to weather whatever economic storm awaits. 

Outside of Fed decisions and outside market moves, we got another solid ethanol production figure, with production up 21,000 barrels a day. Interesting to note we saw a large increase 2 weeks ago, with an adjustment lower last week, only to see a decent bump up this week keeping the 4 week average stout. We did see a slight uptick in gasoline demand, but that's not saying much comparatively speaking.

Traders continue to monitor the global pipeline when it comes to grain as well, as we are starting to hear more about the government to government deals on wheat India is working to put together. The Indian government made the UAE promise it would not re-export any wheat supplies it has or will receive from the country in order to continue to have access to supply. The UAE agreed, something many tried to spin as an export ban throughout the day yesterday, though it obviously isn't a ban in the traditional sense.

India also announced it will be working with Kuwait and other Middle Eastern governments directly to arrange price and shipments. In addition to government to government sales the Indian government is working to facilitate it is also working to put together a deal exchanging wheat exports for palm oil with Indonesia.

Speaking of Indonesia and palm oil, after close to 10 abrupt policy shifts when it comes to palm oil exports, the trade minister in Indonesia has been relieved of their duties.

Other market news had traders talking of a soybean export cancellation announced early yesterday morning to unknown. Even with 100,000 tonnes cancelled we continue to run ahead of current USDA estimates for bean exports, with actually more cancellations needed to avoid further reductions to US carryout.

NOPA crush came in slightly below expectations, but at another record high for the month. Products in the report came in close to expectations with no major surprises seen.

Looking ahead we will get updated export sales figures this morning, with traders expecting relatively mundane demand for the week. Weather continues to dominate with the GFS trending wetter across much of the Corn Belt in the 6-10 and 11-15 day forecast than the Euro model. Heat looks to continue with days of reprieve before temperatures soar again.

Corn up 5 to 10

Beans up 5 to 10

Juneteenth Holiday Trading Hours

Sunday, June 19

  • No evening trading session.

Monday, June 20 (Juneteeth Observed)

  • CME Group CLOSED for daytime operations.
  • Evening trading for grains resumes at 7:00 p.m. CST

Tuesday, June 21

  • Grains trade normal hours.
  • Livestock resumes trading at 8:30 a.m. CST