Morning Comments November 16, 2022

July corn

What was a mostly quiet day of weaker trade got turned on its head yesterday when reports of a Russian missile killing 2 citizens in Poland hit the wires, sending markets higher on worries over a major escalation involving NATO. At the end of the day, corn and Chicago wheat were up 10, while beans were 17 higher.

All attention shifted back to Ukraine and Russia around midday when initial reports indicated a Russian rocket had landed just inside the Polish border, killing two and raising fears that NATO countries would now become directly involved in the Black Sea conflict, possibly pushing the world into World War III.

However, as the day wore on questions surrounding the attack began to surface, with world leaders asking for peaceful patience while they work to investigate the incident. 

This morning representatives from NATO as well as President Biden and the Polish president say initial investigations indicate the blast was likely caused by a missile sent errant by the Ukrainian air defense system. Turkey’s president added there was no need to assert that Russia had caused the blast, saying trying to force them to take responsibility for something they did not do would be the provocation.

Outside of big swings caused by headlines and a reminder that two major global grain suppliers are still at war, market news was relatively limited. The National Oilseed Processor Association released their updated crush figures for October, coming in as expected ahead of the report and showing the second best October crush figure on record. We are only two months into the marketing year, but this keeps us relatively in line so far with USDA expectations for domestic demand.

Looking ahead, a lot of attention is likely to turn back to central bankers around the world as October data has shown rate adjustments are starting to have an impact, with peak inflation thought to be close, if not already seen for many Western countries. Inflation data out of the UK came in worse than expected, with consumer prices up 11.1% versus a year ago, outpacing analyst expectations of 10.1% and hitting the highest level since 1981. 

The dollar index remains well off its recent highs, still elevated but trading near August lows, with future direction, likely dictated by central bank adjustments in the coming months. 

The overnight markets were much weaker on the news that yesterday’s blast was not intentional and is unlikely to send us into a more escalated conflict. We will continue to monitor developments when it comes to the Black Sea corridor and what happens next with Russia, but currently, the market seems comfortable with its current pricing structure, likely until more is known about the South American crop, where dryness in Southern Brazil and Argentina is raising some level of concern.

We will get updated energy information this morning, with traders looking at ethanol production figures as we have seen several weeks of growth in weekly production after bottoming out in September. 

Corn down 5 to 10

Beans down 10 to 15