Morning Comments May 17, 2022

Shutterstock 526530454 Soybean Fields

Wheat didn't take much time after the morning reopen to rally to limit higher and spent much of the rest of the day there on concerns about what India's wheat export restrictions could mean in the big picture of global supply and demand. On the day, wheat closed up 70, with July corn up 28 and December corn up 16. Soybeans had more of a lackluster day, but still turned some important indicators back to bullish, closing up 10 on the day, with November beans up 13. 

The market didn't wait to ask many questions regarding the details of the Indian wheat export ban, especially after a major news outlet reported upwards of 1.8 mmt was sitting at ports unable to ship due to a lack of current letters of credit. Exporters and farmer groups were beside themselves when it came to the decision as well, saying they were blindsided by the move.

This morning, however, more details are coming to light, with word from officials indicating any supplies that have been signed over to customs and entered into the system for export will be allowed to ship. This move is likely working to clear the backlog at ports, allowing traders to continue filling boats partially loaded when news broke and meet much of their obligations on the books.

In reality, as we suggested yesterday, the restrictions in place likely won't act to completely remove Indian wheat from the global pipeline as initially feared but will result more in the way of pointed sales to friendly countries or allies. 

Speaking of global supply availability, Russian grain exporting authorities are pushing members of the G7 and other nations to address what they claim to be unfair restrictions when it comes to selling and shipping grain into the world market. They claim there are no sanctions on grain, but the inability to insure or receive payment for transactions due to banking restrictions are unfairly challenging hungry nations. 

With European officials notifying EU energy companies that a purchase of Russian energy supplies in rubles would not break sanctions, many are beginning to wonder if we could see a similar move to help keep the global food pipeline supplied.

Wheat around the world continues to experience a variety of conditions, with the Hard Red Wheat in the Southern Plains facing what appears to be the biggest struggle weather- and condition-wise out of the lot. Chinese officials in the country's largest wheat producing province, Henan, updated their wheat outlook Sunday, saying the massive effort by the government and farmers to save the province's wheat crop worked and they are now expecting a bumper harvest.

Officials had recently issued a dire warning regarding wheat production potential after heavy rains and poor winter conditions had resulted in some of the worst early spring wheat crop conditions on record. Conditions were so poorly rated local and regional officials issued millions of dollars in an attempt to 'save' the crop and it appears at this point at least, it was money well spent.

In other news, we continue to wait on the White House to issue its updated renewable fuel blending figures for 2020, 2021, and 2022. Officials have said the EPA turned their suggestions over to the administration weeks ago, with members of the White House now reviewing their figures.

Reuters reported late yesterday, however, that according to several insiders, economic advisers have been challenged with looking into blending requirements to see where adjustments may be made that could help lower food costs. 

As President Biden has said so many times in recent weeks, his number one domestic policy is fighting inflation, however this could be viewed as a toss-up as many renewable fuel industry members will say a lack of blending would only increase the price at the pump. At the same time, however, many small refineries that continue to battle renewables claim a lack of mandated blending would help them increase output subsequently reducing costs at the pump.

Export inspections yesterday saw soybean and wheat shipments come in below the weekly amount needed to meet current USDA projections, with corn slightly above the amount needed. Corn shipments to China were multi-week lows with bean shipments near a marketing year low.

NOPA crush released midday saw April soybean crush come in slightly below pre-report expectations but within the range. Crop progress released after the close saw corn planting come in at 49% complete, in line with trader expectations, but well below the average pace. Soybean planting is 30% complete nationwide, in line with pre-report expectations but also well below average. Wheat conditions fell on the week, down 2% to 27% good-to-excellent, with sharp declines seen in the HRW crop and improvements in the SRW crop.

Looking ahead, we are seeing a bit of backtracking in wheat upon talk of India relaxing restrictions this morning. Weather-wise, we will continue to see concerns regarding frost potential in Southern Brazil this week with lows in the mid to low 30's expected. Planting progress in the U.S. should remain relatively decent.

Corn down 3 to 4

Beans steady to 1 higher