Morning Comments November 15, 2021

Grain Corn Pile Closeup

Soybeans were the surprising leader to the upside Friday, gaining over 20 cents on the day as soybean meal continued its big move to the highside and traders feeling beans are cheap in the face of strong corn and wheat prices.

Since its low established on October 13th, December soybean meal has gained 54 dollars a ton. While meal initially started the marketing year as the weak leg of crush, some concerns over lysine supply availability combined with a solid increase in exports and the fact it was simply oversold has brought buyers back to the market.

Hog feeders noting that the cost of lysine, an amino acid necessary to add to a ration when feeding grain, has become difficult to source with the price over 3 times higher than seen throughout the summer months. The lack of available lysine has pushed these hog feeders back into the meal market, somewhat unexpectedly as stout ethanol production figures have made distillers relatively cheap.

While the inversion in the meal market structure indicates much of the shift in demand may be front loaded, continued concerns over lacking canola supply in the world market after the drought in the Northern Plains and Canadian Prairies will likely keep demand strong throughout the year.

In addition to strength in meal values we have seen continued Chinese purchases for soybeans out of the US for the Dec/Jan time period, with another 8 cargoes reportedly traded overnight Thursday. The USDA confirmed the rumored business we discussed Friday with an announcement of just over 290,000 metric tons reportedly sold to unknown.

Export sales for soybeans were at the higher end of the pre-report estimates as well. Out of the 1.29 mmt sold last week, China accounted for 939,000 of it. Shipments were a record on the week.

Corn and wheat exports were reasonably decent last week, though corn sales were down slightly from the week prior. Interesting to note Canada was the largest buyer of U.S. corn last week.

Looking ahead, we will be monitoring closely just what Russia is up to. Wheat traded to another new contract high as we are not only seeing Russia yet again raise their export tax and make moves to potentially limit what they ship next year; we're also watching their role in two geopolitical hot spots.

The European Union said Friday it was “alarmed” by the moves Russia is making along the Ukrainian border, saying the consolidation of troops and equipment is similar to what we saw in 2014 prior to the Russian invasion. While Russian President Putin says what the country does with its own troops along its own border is its own business, folks from around the world will be watching developments closely, as neither country feels the 2014 war has been settled.

In addition to consolidation along the Ukrainian border, we are watching what is happening along the border between Belarus and Poland. Officials with the EU claim the Belarusian president lured thousands of migrants and refugees from Afghanistan, Syria and Yemen to the Polish border, trying to force the EU to take on their care.

The Belarusian president threatened to shut off gas flow to Europe last week if they didn't do something to fix the issue. Putin however, a close ally, was quick to walk back the threat, though the two countries later took part in a military readiness drill together.

In addition to geo-political tension we will continue to watch energy prices and the outside inflationary trade. News-wise we will get updated export inspections this morning at 11 eastern, with NOPA crush numbers and crop progress released in the afternoon.

Corn steady to 1 lower

Beans 1 to 2 lower