Morning Comments May 24, 2022

Soybean Field Sunshine

We saw a relatively decent unwinding of late last week's market moves, with corn and wheat trading higher yesterday while soybeans were lower. At the end of the day, we saw all wheat classes 20 or more cents higher, with corn up 7. July beans were down 18, while November were down 3.

Some analysts are crediting yesterday's move in grains to the realization that Russia is unlikely to allow shipments of grain out of Ukrainian ports without a rollback on sanctions, something the West is staunchly against. With negotiations seemingly going nowhere, neighboring leaders and Ukrainian officials are pushing the UN to provide some type of safety corridor to Ukrainian ports for ships looking to load. 

This is of course bringing with it risks of a potential escalation to the conflict, though many petitioning the UN would argue the risk of starvation throughout the Middle East and into Africa is far too great not to make a move soon. 

Speaking of global grain flow, we are waiting on official confirmation, but according to one well-followed analytical group out of China, Brazil and China finalized their 10-year strategic blueprint for agricultural imports yesterday. According to Sitonia Consulting, this agreement would open the door to imports of corn, soybean meal and other feed products, with up to 10 mmt of corn imports allowed annually. 

Upon the announcement of the agreement, Chinese state media fawned over the potential of Brazilian ag supplies, calling the country the "potential granary for the world."

Meanwhile, U.S. corn is flowing to China at a relatively strong rate, with the highest weekly shipment total seen for this marketing year in yesterday's export inspections. China accounted for nearly half of this week's shipment total, taking 31 mbu of the nearly 67 million bushels shipped, with around 200 million bushels left on the books unshipped. 

Soybean shipments came in slightly below the amount needed to meet current USDA projections, but within the range of pre-report estimates. Wheat shipments came in close to what we've seen for an average these last few weeks and in line with expectations.

After the close we got updated crop progress figures showing corn planting pace has nearly caught up to the 5-year average after two solid weeks of progress. According to the USDA, national corn planting is 72% complete, up 27% from last week and coming in 4% higher than traders were expecting. 

Corn progress is now only 7% behind the 5-year average, with the biggest drops from normal pace seen in North Dakota and Minnesota where pace is running 46% and 26% behind normal. Other slower than average pace seen in Ohio and Pennsylvania with the two states running 7-10% behind.

Soybeans are estimated to be 50% planted nationally, 5% behind average with North Dakota and Minnesota again showing well behind average pace. One point of interest is the rapid planting pace seen in Delta beans, with Louisiana, Arkansas, and Mississippi 10% or more ahead of their average pace. This is potentially driven by early export market opportunities seen the last several years.

Winter wheat conditions improved but only slightly, with continued poor conditions seen in the Southern Plains. Spring wheat planting continues to lag, running 34% behind average, with North Dakota and Minnesota showing the biggest delays in planting. 

Looking ahead, trade is likely to continue to debate what is happening in North Dakota and Minnesota and what it could mean for production as a whole with North Dakota seeing final planting dates for crop insurance hit on Wednesday. There had been some rumblings of potential extension to dates, opening the door to continued planting pace, though nothing official has been confirmed. 

Wheat continues to show strength this morning as world leaders continue to talk of food shortages and French wheat seems to be getting rains, but not enough to make farmers or traders comfortable. 

Corn down 3 to 5

Beans up 3 to 5