Morning Comments October 19, 2022

Sweeping Corn Landus Cooperative

Corn held up well in the face of a crude sell off and a general risk off sort of feel in the markets yesterday, finishing the day 2 lower. Wheat and soybeans did not fare quite so well, with continued harvest pressure and talk of positive developments for the Black Sea corridor pushing wheat to finish 11 lower, while beans were down 13.

There was limited fresh news in the conversation surrounding the Black Sea corridor yesterday, with UN officials continuing to express confidence the deal will be extended. The cash markets in Ukraine aren’t as confident, with physical traders limiting what they will sell beyond early November out of fear they will not be able to access ports.

Current offers out of Ukraine into the global pipeline are incredibly low to cover the extra costs and uncertainty, with wheat around $5.77/bushel and corn hovering just above $5.25.

Cost alone isn’t enough though, with many global buyers willing to pay more to ensure they will get supplies when they are needed. Corn exports out of Brazil continue at a record pace, with expectations for this month’s shipments continuing to grow according to an industry group there.

As it stands currently Brazilian values are just over $2.00 a bushel cheaper than US offers in the spot market though many expect Brazilian supplies to dry up in the coming weeks, pushing their values higher as US harvest supplies hit the pipeline.

In other news, the Biden administration will formally announce its plan to combat continued high oil prices today, with the administration releasing its main talking points overnight. According to the announcement the administration will release the last 15 million barrels of supplies left in the 180 million barrel release announced last spring.

In addition to the last tranche of supplies being released into the market, the administration announced it will repurchase reserve stocks when the price falls to between $67-$72/barrel, effectively setting a price floor. These purchases will be done using a competitive bidding process and will use fixed priced contracts as well, something the administration hopes will better stabilize the long-term pricing outlook, encouraging investment.

Crude was off big yesterday on worries the administration would announce some type of export restrictions but at this point that does not seem to be planned.

Looking ahead, we will get updated energy information today, with traders expecting to see steady to higher ethanol production from a week ago, with a similar outlook for stocks.

The dollar is working higher again after a recent setback, with the dollar/yen conversion working towards 1990 highs, nearing 150. While the dollar index is off from its late September high print of nearly 115, it is expected to remain strong, something that is wreaking havoc on some global importers, with Egypt reporting wheat sitting at ports unable to be unloaded as purchasers are no longer able to afford supplies.

With Fed members continuing to call for further aggressive rate increases it is likely we will see continued strength in the dollar, with global demand likely to be impacted as a result.

Morning markets are mixed with wheat higher, corn and soybeans lower and crude up after yesterday’s selloff.

Corn down 3 to 5

Beans Down 10 to 15