Morning Comments May 2, 2022

Grain bins dryer

Wheat had a rough day on Friday, falling off 30 cents while corn and beans managed to finish the day nearly unchanged. On the week we saw corn up 25 cents, marking its fourth week in a row of gains, finishing the month nearly 70 cents higher.

Today's trade is expected to be a bit thinner though, potentially not quieter as a good portion of the world is on holiday. Palm oil markets will be closed all week with Chinese markets closed through Wednesday.

We are now a week away from the much-rumored deadline for Russian victory with Russia seemingly no closer to accomplishing that goal today than they were at the start of the invasion. 

There were numerous reports over the weekend of Russia's military targeting Ukrainian grain and farm equipment in the disputed regions. Tons of grain has been loaded and taken back to Russia according to Ukrainian officials, with reports of millions of dollars of farm equipment taken from a Ukrainian John Deere dealership only to be found as remotely locked once it was offloaded by Russian troops in Chechnya.

Civilians were released from the besieged steel plant in Mariupol and allowed to safely travel to Ukrainian controlled territories after nearly a month of hiding in basements and underground tunnels. 

From an agricultural perspective, according to local analysts and agronomists, farmers in the areas not dealing with Russian aggression are trying to do their best to function as close to normal as possible. One analyst believes total wheat acreage will come in close to the five-year average after a big push to get Spring wheat planted. 

Corn acreage remains up in the air currently as farmers are only just beginning their planting campaign when it comes to sunflowers, soybeans, corn, or other crops. The government had pushed farmers previously to try and reduce corn acres as concern is beginning to arise when it comes to storage and how to handle the amount of corn still waiting to be shipped in addition to another round of production.

Export pace remains less than 20% of pre-war volumes, though late last week a bright spot was seen as the first ship of Ukrainian corn was loaded out of Romanian ports destined for Spain.

Elsewhere, two steps forward, one step back for Shanghai residents as excitement over claims of the city being close to reaching 'societal zero' when it comes to Covid cases were marred by reports of a fresh pop up of cases in an area previously determined to be low risk. 

Residents of Beijing are getting nervous regarding potential lockdowns as more restrictions are being put in place and areas set to be tested continue to grow.

Covid restrictions in the country are being given the blame when it comes to a sharp reduction in factory and service PMI for April, with factory activity in China the slowest since February 2020. 

Eurozone factory activity was off in April as well, though a sharp increase in raw material costs and energy is behind that adjustment. 

Both of which, however, will likely be taken into account this week when the Fed announces its decision regarding rate hikes and monetary policy. The announcement set for Wednesday is expected to result in a 50-basis point hike and quantitative tightening, or a reduction in the Fed balance sheet.

Looking ahead, it's all about weather here in the U.S. with another round of rain expected today into tomorrow for the already saturated Eastern Corn Belt. The very dry areas of the Western Belt and Southern Plains are expected to get some much-needed moisture as well, though the timing could be considered less than ideal as an aggressive early start to planting across the country is now out the window.

Forecast-wise, according to models much of the Eastern Belt will turn drier through at least May 12th after the system exits to the east late Tuesday, with the Western Belt seeing much smaller windows for planting.

Temperatures are expected to return to normal in the 6-10-day forecast with above normal temperatures expected for much of the country in the 8-14-day.

We will get updated export inspections this morning, again closely watching corn numbers as we need to see around 58 million bushels a week to meet current USDA expectations, soybean numbers need to run around 20 million or so.

Corn down 10 to 15

Beans down 10 to 15