Morning Comments March 23, 2022


Markets were back and forth much of the day yesterday. Old crop/new crop spread action received the most attention as we continue to see traders exit front month positions, choosing to move to deferred months where there has been less volatility as of late.

On the day we saw May wheat finish down a penny, with deferred months all higher. May corn was down 3 at the close, with December corn up 6. The spread action was a little less pronounced in soybeans, but we still saw Nov beans finish 8 higher, with May up 6 as well.

Though the headlines remain plentiful, actual developments in the Black Sea are limited. Reports on what is happening when it comes to peace negotiations are few and far between these days. While Ukrainian President Zelensky continues to speak to leaders and representatives around the world asking to be granted a no-fly zone and working to secure aid, Russian leaders have continued to threaten the West and NATO on the consequences of any additional involvement. 

President Biden will travel to Europe this week to meet with leaders on what another round of sanctions would look like. Many are beginning to think this round will target oil and energy exports as Biden and other leaders are expected to unveil an energy plan for Europe that would limit the use of Russian energy supplies. 

We continue to hear stories of Russian exports making their way into the global market however, with reports now that U.S. officials may start monitoring secondary banking resources to see if other countries are skirting sanctions, threatening repercussions if discovered. 

Representatives of Ukrainian agriculture continue to update their outlooks on this year's production. Currently, temperatures remain a bit colder than normal, providing a slower start to the country's planting and Spring fieldwork. Folks in the industry say some work has already started in the country, with the areas not directly affected by the Russian invasion able to secure adequate supplies.

Many agree the country's corn crop will likely be cut in half this year, with major reductions in all other crops as well. Though on a bit of a positive note, one well-followed analyst believes exports out of ports could resume in as little as 2-3 weeks after an end to the active military campaign. For now though, Ukrainian shipments are limited to rail and averaging around 300,000 tonnes a week into Poland, a far cry from their normal export pace. 

With an estimated 8 mmt of corn that was set to be shipped in the coming months currently sitting in Ukraine, South American corn production is that much more important. Argentina is nearing the end of the crop season, with the first round of early planted corn currently being harvested. Early yields were said to be lower than expected, though reports are now indicating improvements in yields as harvest continues. 

Weather for Brazil's Safrinha crop continues to be free of concern as well, with a large portion of Brazil's second crop out of the woods here soon when it comes to production risk. Many believe the crop will come in close to current expectations, with some analysts thinking production could even come in above expectations as high prices incentivized maximum plantings and weather has been cooperative so far.

Looking ahead, we will get updated energy information this morning. Ethanol production continues to roll along at a decent pace, though stocks remain high. We did see some potential signs in big export movement in regional stocks figures released last week, so many traders will be watching closely to see if we get a subsequent reduction in overall supplies this week as shipments commence. 

Speaking of shipments, Canadian Pacific employees across all of Canada resumed work midday yesterday. The hiccup in movement will still result in some shipment delays and headaches, though the quick remedy is well received by just about everyone in the industry. 

Markets will likely remain strong as it appears there is no end in sight to Russian aggression and food scarcity stories continue to run daily in the news. 

Corn up 3 to 4 

Beans up 10-12