Morning Comments June 30, 2022

Agronomy Sprayer

Markets were mostly mixed yesterday as traders aren't really willing to stick their neck out ahead of today's updated acreage and quarterly stocks figures. Front month futures remained strong for corn and soybeans as we continue to get mixed signals from the cash market. When the day was done we saw July wheat down 6, with Kansas City up 1 and Minneapolis down 15. July corn was 11 higher with both September and December down 6. August soybeans were up 15.

Historically speaking today's report tends to be a major market mover, with big stocks or acreage misses by traders ahead of the report seen over the years. The big misses have resulted in some memorable market moves, usually exacerbated by our weather forecast as we have a glimpse into what weather will look like for pollination and we head into a holiday. 

Fresh news was limited yesterday with markets mostly trading in a wayward state across the board. Fed Chair Jerome Powell spoke on a panel with his European Central Bank and Bank of England counterparts yesterday, with all three clearly stating their desire to curb inflation. Powell was the most upbeat with his outlook, saying the American economy is in the right condition to withstand a tightening to monetary policy.

Powell's ECB counterpart Christine Lagarde wasn't quite as upbeat, saying the war in Ukraine will make it difficult for the European Union to move back to a low inflation environment. The affects of the war on countries in the EU are just starting to become clear as we saw German unemployment jump unexpectedly this month as the country's labor department starts to count Ukrainian refugees in their employment statistics. 

Perhaps one of the largest developments in the war in several weeks took place overnight as Russian troops left Snake Island, one of their earliest captured positions. Ukraine had been fighting to regain control of the island, saying it was vital the do so to ensure a safe corridor of travel for grain exports into the Black Sea. 

Russian officials claim their departure from the island was a gesture of goodwill, and being done as an indication of their intent to work with the UN to reopen Black Sea exports.

Back here in the US, ethanol production was down a bit over the last couple of weeks, with stocks off as well on strong exports and domestic demand. Strength in basis in the Western Corn Belt has started to reduce margins, potentially leading to some slowdowns, but ethanol demand remains stout.

Looking ahead we will get updated export sales this morning. We are starting to hear reports of more washouts of US bean cargoes for late summer shipments as weakness in Brazilian export values as of late has made it more cost effective to make the switch. Overall export demand is expected to remain soft, with limited new crop sales anticipated as well. 

The USDA will release their updated acreage and stocks figures today at noon eastern. Traders are expecting a slight uptick in corn acres, with the average trade estimate at 89.9 million versus the March figure of 89.5. Soybean acres are expected to come in around the same amount lower, with traders anticipating bean planted acreage at 90.45 versus 90.96 in March.

Spring wheat acreage is expected to be down around 400-500,000 from March, with additional reductions expected to be seen in durum, cotton and barley. Sorghum acres are expected to be slightly higher. 

Stocks-wise the actual June 1st figure doesn't matter as much as whether or not it is inline with where it should be based on current demand projections for the third quarter of the marketing year. A higher than anticipated stocks figure indicates lower than expected demand for the quarter, and potential subsequent increases to ending stocks. While a lower than anticipated figure means better than expected demand, and a likelihood of reduced ending stocks in the next USDA supply and demand report.

Ahead of the report it is unlikely we will see any major moves as most weak longs have gotten out of the market and many other well schooled market participants will wait until after the report is released to do much.

Corn down 5 to 7

Beans down 1 to 5

Friday, July 1st

  • Normal close for Grains and Livestock
  • MID-CO staffed until 4:30 p.m. CST

Sunday, July 3rd

  • No evening trading session

Monday, July 4th INDEPENDENCE DAY 

  • MID-CO and AgriVisor CLOSED
  • No evening trading session

Tuesday, July 5th

  • Grain and Livestock resume trading at 8:30 a.m. CST