Morning Comments November 21, 2022

Cornboard Field 042221

Markets were mixed Friday to finish the week, with grains unchanged to lower and beans up 12. For the week we saw corn end 10 higher, wheat 10 lower, with soybeans down 22.

Fresh fundamental news remains sparse as we work our way from the Northern Hemisphere production season to the Southern one. There has been a lot of talk over the last week of interesting cash market developments thanks to high basis levels and currency conversions.

The spread in values around the world has made it possible for the US to not only import soyoil as we discussed last week, but cash traders now say a cargo of Polish wheat was purchased by a flour miller in the Eastern US as it landed over $2.00 a bushel cheaper than hard red wheat railed in from the Southern Plains.

In addition to interesting cash market dynamics, we are seeing questions continue to surface when it comes to demand as corn exports remain at less than half of last year’s pace, even after the recent spate of big sales to Mexico. Wheat sales remain slow as well, while soybean sales are ahead of last year thanks to bigger buying interest from China after they failed to prepare for the South American drought last year and were caught short.

Speaking of South American weather, traders are watching conditions in Southern Brazil and Argentina closely. Rainfall in Argentina has been short for several months now, with conditions historically dry. The dryness has delayed planting, with many farmers choosing to hold off on corn planting until December and soybean planting running 17% behind last year’s pace.

The country’s wheat crop has already been significantly damaged, with current production estimates falling between 11-15 mmt, down from last year’s 22 mmt. Brazil relies heavily on Argentina's wheat imports and though it is expecting a record wheat crop of its own, has already reportedly turned to Russia to cover the anticipated Argentina shortfall.

Recent rainfall in parts of the country is seen as supportive of conditions and likely to encourage an uptick in planting pace. Current model runs indicate little rain in the forecast for much of the country over the next 7 days, with moisture returning in the 8-14 day outlook. Brazilian weather for the most part remains conducive to production, with many analysts bumping their production outlooks up slightly over the last few weeks.

Looking ahead we will be watching developments out of China closely as Covid cases continue to climb there and large cities throughout the country are struggling with a more relaxed approach to fighting the virus while dealing with outbreaks.

Beijing reported 3 deaths over the weekend, the first reported Covid fatalities in the country since the end of May. The deaths and spike in cases has local officials shutting down public transportation and talking about lockdowns in districts across the city.

Meanwhile in Shijiazhuang, just a week ago citizens in the city of 11 million were excited over reopening rumors and talk that testing centers would be shut down. This morning local government officials there announced a 5 day lockdown as case counts climb. Other cities across the country are dealing with similar struggles as any that have attempted reopening as of late have found a spike in cases, forcing them to backtrack.

We will get updated export inspection figures this morning at 11 eastern, with updated crop progress this afternoon. Grain markets are lower this morning on China lockdown concerns and limited buying interest.

Corn down 3 to 5

Beans corn 4 to 8