Morning Comments December 14, 2021

Soybeans2

Corn and soybeans finished lower yesterday with beans well off their highs, while wheat managed to close a bit higher.

The simple explanation to yesterday's sell-off in beans and lower trade in corn was that we had more rain than expected in the drier portions of Argentina, with showers in the drier portions of Southern Brazil developing late yesterday afternoon into the overnight.

With much of the Central and Northern portions of Brazil experiencing nearly ideal production weather after an early start to planting, folks have assumed the crop out of Brazil will be nothing less than a record. However, according to World Ag Weather and other private meteorologists, portions of Southern Brazil are likely to close out the month of December with the driest 2 month stretch seen there since the mid ‘80s, hence the importance of any bit of measurable moisture in the short-term.

According to one well-followed meteorologist after the bout of rains seen over the weekend and overnight, the pattern returns to a mostly dry one, with an increase in warmth over the next couple of weeks. However, there are some signs that La Nina could be reaching its peak, potentially indicating a breakdown in the current weather pattern, returning to a more normal one. 

With it being the equivalent of mid-June in the region, what takes place beyond the next two weeks weather-wise will be imperative for overall production. Current crop conditions are still rated relatively well considering, with government groups in both Brazil and Argentina continuing to predict record production for both corn and soybeans at this point.

Export inspections came in on the lower end of the range for corn, below expectations for soybeans and in the middle of the range of estimates on wheat.

Corn shipments for the week came in relatively consistent to what we've been seeing lately at just under 32 million bushels. We did see China show up taking shipments of just over 10 million bushels, their largest chunk shipped in a handful of weeks, while Mexico and Japan took the lion's share of the rest. While 32 million bushels is a reasonable pace, it is still well below the 55 million bushels or so of corn we need to ship each week to meet USDA projections.

Soybean shipments came in at 63 million bushels, above the weekly pace needed to meet USDA projections, but below analyst estimates. China took shipment of nearly half the weekly inspection figure.

Wheat inspections were again around half of what is needed to meet current USDA projections as the world continues to purchase cheaper supplies closer to home. 

Speaking of exports, we are starting to hear more abundant chatter regarding Chinese and Russian relations. The two countries have been working to create more in the way of free trade between each other, with China moving to approve exports from all regions of Russia, opening the door to significant increases in grain export potential. 

In addition to working closer when it comes to commerce, we are now seeing the Kremlin call upon China to help with what they are calling aggression from the U.S. and NATO when it comes to Ukraine. 

With so much in the market tied to Chinese demand and Russian supplies, this is definitely something we will want to watch closely in the weeks and months ahead. 

Looking ahead, we continue to work our way into holiday mode, with more and more folks looking to head to the exit before they mess up what could have been a good year. Lower volume will likely make for wilder moves, be prepared for big price swings and make sure you have sales in place if you know you'll have bushels to move either before year end or right after the new year.

Corn down 1 to 2

Beans down 2 to 3