Morning Comments March 15, 2022

Cornboard Field 042221

It was a risk off sort of day yesterday as commodities seemed to take a breather across the board. Concerns over Chinese demand if Covid continues to spread and hope that we're nearing a resolution in the Black Sea brought in some selling. On the day, May corn was down 14, May beans were down 5, and May wheat was down 10.

Traders are continuing to watch negotiations between Russia and Ukraine closely as both sides work to hammer out some type of peace deal. Ukrainian representatives say they are willing to compromise, while the Kremlin says talks continuing are a good sign. 

In a somewhat surprising move, we have seen Chinese representatives starting to speak unfavorably of the Russian aggression, with China's foreign minister saying yesterday, "China is not a party to the aggression." They went on to add that China does not want the sanctions currently being placed on Russia to impact them. 

In addition to speaking out against the Russian aggression, Chinese delegates are also reiterating their dislike of the use of sanctions as punishment, warning the economic fallout from the use of such tools could be detrimental globally. 

We are seeing businesses continue to pull non-essential money and resources out of Russia in the meantime as well, with Bayer becoming the newest business with a public statement regarding the conflict. While Bayer will continue to provide medical and other essential supplies to Russia in the short-term, they did threaten the availability of 2023 crop inputs if the aggression were to continue, saying all needs for 2022 would be supplied.

As mentioned, talks between delegates of the two countries will continue today with continued hope a draft resolution can be created opening the door for a direct meeting between the two leaders. In addition to continued negotiations, Ukrainian President Zelensky will address both chambers of Congress tomorrow, requesting additional U.S. aid. 

Outside of what is taking place in the Black Sea, we are continuing to monitor what is happening in China as Covid cases continue to soar and concerns over asymptomatic spread are on the rise. Just today Chinese officials confirmed overall case numbers in the country more than doubled from yesterday, with case amounts hitting their highest level since the pandemic began.

Over 50 million people have now been impacted by Covid lockdowns there, with many of the major disruptions happening in manufacturing hubs. China's Lanzhou University said in an assessment Monday it expects case levels to surge to over 35,000 by early April, saying though that the country will be able to get the infections under control if "stringent curbs" remain in effect. 

Looking at strictly grain news, we are continuing to monitor South American weather as Argentina works to move into the last part of its growing season and Brazil works to finish bean harvest and grow its Safrinha crop.

As of late, many meteorologists have struggled with confidence in long term forecast models. However, confidence in what is likely to take place in the countries' growing regions is on the increase with well-followed meteorologist Eric Snodgrass now starting to feel comfortable Brazil will work into mid-April with decent weather for the Safrinha crop.

With all that is happening in Ukraine, a solid second corn crop out of Brazil is vital to the global pipeline and with decent weather to start the season a strong finish in April into May is key. 

As we wrap up the Southern Hemisphere's growing season, our attention of course turns to the north, where the Southern Plains continue to struggle with drought. Wheat conditions released after the close yesterday are some of the worst on record, with the Texas crop having 75% of its crop rated poor to very poor currently. With limited rain in the short-term forecast, concern is starting to increase that we will see major losses there, something that will likely encourage some buyers to return to the market.

We got updated export inspection figures yesterday morning, with corn figures coming in on the low end of expectations and at a 5-week low. Though 45 million bushels shipped on the week is a solid figure historically, it was 14 mbu lower than the 59 mbu needed each week to meet USDA expectations. Soybean shipments were basically flat on the week and still remain above the amount needed to meet USDA projections. Wheat shipments were the lowest in 2 months. 

Looking ahead, we will continue to monitor what is happening during this week's Federal Reserve meeting with Jerome Powell's rate decision announcement coming tomorrow. Other central banks are meeting this week as well, with the Bank of England set to announce what they will do with rates on Thursday and the Bank of Japan coming on Friday. 

Volatility is likely to be on the increase this week as the situation continues to change. 

Corn down 7 to 10

Beans down 25 to 30