Morning Comments January 25, 2022

Bin sunset harvest

Volatility has become the name of the game it seems for both grains and outside markets as traders scramble to make sense of what is currently taking place globally and betting on what will happen next. 

It is interesting to note that March soybeans had over a 40-cent range on the day before closing 11 lower. In the outside markets we saw all major stock indices trade to multi-month lows before recovering significantly into their respective closes, all finishing slightly higher on the day. Corn and wheat shrugged off early weakness as well, finishing higher on the day as Russian/Ukraine tensions continue. 

Weather forecasts in South America are keeping a good deal of moisture across the heart of some of the driest parts of the region through the next 7 to 10 days, with a much-needed drier forecast for northern areas trying to harvest and plant Safrinha crops as well. Extreme heat in some portions of Southern Brazil with more limited rainfall has continued to take some crops in the region backwards, though it does appear relief is coming.

It looks like moisture will return for the drier northern areas this weekend forward, with some dryness concerns popping back up for Argentina in February. As we have discussed numerous times these last few weeks, forecasters continue to struggle with extended forecasts as the oceanic and atmospheric signals they tend to rely on remain mixed. 

Tensions between Russia and Ukraine continue to work towards a boiling point, though at this point some in the region may suggest Russia's axe to grind is quickly shifting from Ukraine to NATO. As you may recall, much of this tension stems from Russia's insistence the West back off, leaving the region and not allowing Ukraine to join NATO. 

With many NATO nations now actively working to supply troops, weapons and money to Ukraine, Russia continues to build up troops and supplies while adding to its lists of demands.

There seem to be two camps of thinking currently, the first being this is all war games and Russia is pushing the West to see what it can get out of them with no real intent to invade, while others think it's only a matter of time before something big takes place, though many feel they will wait until after the Olympics to do so in order to avoid taking the spotlight from their friends, the Chinese.

In any event until we see some type of resolution and withdrawal of troops a risk premium remains necessary in the corn and wheat markets. 

Interesting to note, the final 2021 Chinese import figures released yesterday show corn imports from the U.S. accounted for just over 19 mmt of the 28 mmt total. Ukraine accounted for the other 9 mmt. If left unencumbered by other events, Ukraine has an additional 10 mmt of corn to ship this year. China currently has just over 10 mmt of corn on the books from the U.S. with most officials forecasting a slight downturn in corn imports this year.

Speaking of Chinese corn imports, we saw China accounting for 13.7 mbu of the just under 44 mbu shipped on the week. Though a decent pace, we are still lagging the 56 mbu needed each week to meet USDA expectations. However, last year we didn't really see corn exports really hit their stride until mid-February.

Looking ahead, we will continue to watch what is happening between Russia and Ukraine. We get an updated Fed decision and press conference tomorrow. President Biden had a bit of a blow up at a reporter who inquired on how the administration feels about what's happening with inflation right now, probably answering the question in the most honest way possible without even having an answer.

Corn steady to 1 lower

Beans 2 to 3 lower