Morning Comments April 19, 2022

Sillouette Sunset Location Rail

The return from the long holiday weekend brought with it buying as corn traded to new highs, old crop soybeans are testing contract highs, and July wheat is back up toward the high end of its recent move as well. On the day we saw May corn finish 23 higher, with December up 14. Chicago wheat was up 24, with Kansas City and Minneapolis wheat both up over 30. May soybeans closed 32 higher with November up 19. 

Russia's foreign minister confirmed the next phase of their military operation in Ukraine has begun. Ukrainian President Zelensky calls this next round of aggression the battle for Donbas, saying Ukraine will fight to the end to maintain their borders. 

Russia's troops have departed regions in the north, regrouped and found themselves along the Eastern border of Ukraine, looking to attack and capture a swath of Ukrainian territory estimated to be around 300 miles long. As it stands currently, there is only a small portion of Ukraine's original military group holding control of Mariupol, a Ukrainian port city Russian troops would need to pass through in order to access Crimea via land. 

Russian officials say Mariupol will be taken today, something that would free up a large amount of troops to aid in other offenses elsewhere, while Ukrainian officials say the fight will continue.

When it comes to grains, the UN estimates up to 30% of Ukraine's available arable land will go unplanted this year. The Ukrainian ag ministry seems a bit more optimistic, saying they expect spring plantings to decline around 17%. 

Russia continues to export wheat at a strong pace, with Putin claiming the sanctions put in place by the West failed to do what was intended and that the Russian economy remains strong. 

Elsewhere, we continue to monitor the situation in China as we see reports of lockdowns and case levels continue to grow. Health experts are claiming 'dynamic Covid clearance' should be the goal, meaning stopping the spread of infection in its tracks upon detection by quarantine and removal of infected individuals.

Shutdowns continue to impact logistics and movement of both raw commodities and finished products, with reports continuing to surface of crush plants shut down now for weeks as raw supply remains spotty at best, and meal is proving difficult to move.

Interesting to note, auctions of government wheat supplies continue to show great buying interest, with well over 90% of bushels offered being purchased over the last several weeks, even in the face of rising prices and logistical headaches. 

However, soybean auction results have been abysmal, with less than 20% of bushels offered from government reserves purchased last week. High prices and logistical issues are being attributed to the poor buying interest. 

Here in the U.S., soybean export shipments were counter-seasonally large, with nearly 36 million bushels shipped on the week versus the 22 million bushels or so needed. Corn shipments were down over 10 million bushels from their recent pace, as well as the amount needed to ship each week to meet current USDA estimates. Wheat inspections came in at a multi-week high.

Weather continues to be of concern as cold temperatures seem to want to maintain their presence across much of the U.S. A brief warm up is anticipated over the weekend in the Eastern Belt, with some drier conditions also expected, however cooler than normal weather is expected to return to finish out April into the first week of May. 

Planting progress came in for corn at 4% complete, down slightly from last year and the five-year average, but in line with expectations. Wheat conditions declined again on the week, back down to 30% good to excellent. Spring wheat is 8% planted, slightly below the five-year average of 9%, with limited progress expected this week as yet another snowstorm is expected to center in on North Dakota as we head into the weekend.

Looking ahead, corn has become the media darling as of late, rallying $1.15 from March lows and hitting new contract highs. With limited planting progress expected over the next couple of weeks and dryness creeping into Central Brazil it is likely we will see continued money flow.

Corn steady to 1 higher

Beans 3 to 5 higher