Morning Comments March 14, 2022

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Friday was mostly uneventful as markets and traders settled into weekend mode early it seemed. Wheat managed to find support after having lost over a dollar on the week, closing up 19, corn followed with some strength as well, closing up 6. Soybeans fell victim to some profit taking, down 10 on the day, as $17.00 futures on the front month continue to act as a strong resistance.

The world is currently holding its breath as the fourth round of peace talks between delegates from Russia and Ukraine are being held this morning. According to reports, both sides felt conversations over the weekend provided guidance and direction, with a Ukrainian delegate saying today's conversations will focus on "peace, ceasefire, immediate withdrawal of troops, and security guarantees," adding the talks have become constructive and that he believes results will be seen in a matter of days. 

A member of the Russian delegation agreed on the fruitfulness of the talks, saying negotiators had made significant progress and that it was possible both parties could soon reach draft agreements. Once a draft agreement is reached between both parties it is likely a meeting between Putin and Zelensky directly would be arranged, a goal Zelensky has made clear from the start. 

In the meantime, Russia continues to attack target cities, Ukrainians vow to continue fighting, and world powers continue to grapple with just what their next steps should be. 

A meeting between the U.S. National Security Advisor and his Chinese counterpart is planned for today in Rome. Though the meeting has been on the schedule for some time as U.S. and Chinese security representatives had plenty to talk about before the Black Sea conflict, today's meeting will hold greater importance as the U.S. has warned China of harsh consequences if they choose to help Russia skirt sanctions.

Interesting to note, as the U.S. provides a dire warning to China, India announced it is working on a plan to purchase Russian oil at a steep discount, avoiding sanctions by transacting in cash directly with one another.

In addition to conversations regarding Chinese economic support for Russia, we are watching what is happening as the country faces its largest Covid outbreak since early 2020. Omicron is proving to be a powerful foe when it comes to the country's Zero Covid policy as many asymptomatic patients are unknowingly spreading the disease.

Over the weekend the city of Shenzhen was placed under lockdown. The city is thought to be China's tech and manufacturing hub with a population of over 17 million. All non-essential businesses, including factories, are shut down until the government gives them permission to reopen. Meanwhile in Shanghai, schools have reverted to online courses with spot lockdowns closing entire neighborhoods until all citizens test negative and the spread is believed to have stopped.

Hong Kong is reportedly struggling to contain the disease while Beijing remains on high alert.

Outside of the geopolitical realm, we got news the Argentina government has stopped exporters from registering new crop soy oil or soymeal production for export. Though the news story initially hit as a stoppage to all export business creating excitement considering Argentina is the world's largest exporter of soymeal, local experts say it is only being done as a necessary step to raise export taxes on the byproducts.

Currently the Argentine government taxes soy oil and meal exports at 31%, with officials looking to bump that up to 33%, in line with whole soybean export fees. As expected, representatives for farmers and exporters in the country are up in arms as they say the government is stealing from agriculture to fund its transgressions in other areas of the economy.

Looking ahead, we will be monitoring any progress in the Russian/Ukrainian talks as the world hopes cooler heads prevail and a ceasefire is agreed upon. All commodities appear to be approaching this morning with a risk off type approach, opening the door to a sharp rally if talks stall. 

We will get an updated export inspections report this morning at 11:00 a.m. Eastern, with traders continuing to monitor corn shipment pace, especially as freight seems to have become a nightmare for many in the industry.

Corn 9-12 lower

Beans Steady to 1 higher

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