Morning Comments October 18, 2022

Cornboard Field 042221

Wheat rallied early on more concern regarding the long-term outlook of the grain corridor but fell back to close basically unchanged on reports of ‘productive’ talks. Corn and beans faced harvest pressure for much of the day with corn closing 6 lower and beans finishing up 1.

The story remains much the same when it comes to the situation in the Black Sea. Many of the same traders and analysts who claimed the corridor would be a failure from the start are now fully confident it will not remain open after the first phase of the agreement comes to an end in late November.

As we have discussed many times before, Russia needs to keep cash flowing, and unencumbered agricultural exports of grains and fertilizers are really one of the only options they have.

According to reports, Russia’s deputy defense minister met with the UN under-secretary yesterday to discuss their concerns regarding their side of the agreement. Russia claims Western sanctions on logistics, payments, shipping, and insurance are keeping them from being able to supply the global pipeline with much needed ag products and that the rollback of these sanctions was promised when the corridor deal was struck.

Russia’s deputy defense minister went on to say that the continuation of the grain deal was dependent on a rollback of sanctions as promised.

The uncertainty regarding the future of the corridor has slowed new grain export business through the Black Sea beyond the end of the month to near a stop however, so it is imperative the UN, Russia and Ukraine work to extend the agreement as quickly as possible to restore confidence.

In the meantime, fall crops are being planted across parts of Ukraine into relatively decent weather and soil moisture profiles. Current estimates have Ukraine losing 20-30% of its wheat acreage versus last fall due to the war.

In other news, we are watching harvest continue to roll across much of the country, with decent weather seen throughout much of the Corn Belt outside of the Great Lakes. Corn harvest pace at 45% complete has now outpaced the 5 year average of 40%, but is still lagging last year’s pace of 50%.

Soybean harvest is 63% complete, ahead of last year and the 5 year average as weather has been nearly ideal for the last couple of weeks. Winter wheat plantings are inline with both last year’s pace and the 5 year average, moving to near 70% complete across the country.

Export inspections yesterday were disappointing for corn and wheat, with shipment totals coming in on the lower level of pre-report estimates. Bean shipments were surprisingly high, coming in well above trader expectations with 69 mbu shipped last week. Movement out of the PNW more than offset the loss out of the Gulf, with over 3 times the beans moving from the Western Belt into the export channel than through our river system. China of course was the biggest beneficiary of these shipments, taking nearly 50 million bushels of the total shipped.

Looking ahead, fresh news is relatively limited this morning, with talk of the UK stabilizing its economy thanks to the efforts of a new chancellor putting some pressure on the dollar and helping to support outside markets.

We continue to watch for any new developments from the People’s Party Congress in China, though outside of officials indefinitely delaying economic data for the third quarter, news there remains limited as well.

Corn down 3 to 5

Beans down 4 to 8