Morning Comments June 1, 2022

Agronomy Sprayer Crop Protection

A major risk off day was seen yesterday in grains with July wheat closing limit down, July corn closing down 23 and July soybeans off 49. For the month we saw July corn finish nearly 65 cents lower, with July beans down 25 and July wheat up 44 even after yesterday's limit lower trade.

We have seen a bit of an increase in selling by the managed money group as of late, with a notable uptick in corn selling seen in last week's commitment of traders numbers. Traders are beginning to contend that without a major US weather issue we are running out of bullish input, at least in the short term. 

Others would argue we are looking at a major US weather issue as planting remains incredibly delayed in North Dakota, with noticeably slow pace also seen in Pennsylvania and Minnesota. Analysts estimate upwards of 1.5 million acres of corn remains unplanted in North Dakota, with last Thursday having been their final planting date for crop insurance. 

Overall however, US corn planting pace has come within 1 point of the 5 year average (thanks of course to the drag in progress seen in 2019) at 86%, with most major producing states at or ahead of average. 

Soybean plantings are also running around 1% behind average at 66% with Minnesota and North Dakota showing the most significant decline from normal pace. Analysts believe North Dakota has upwards of 5.5 million acres of beans unplanted, with Minnesota running 25% slower than average.

Spring wheat planting saw a significant jump in pace as well thanks to the drier weather seen in both North Dakota and Minnesota over the last week. With 73% of the crop planted, we are now 19% behind the 5 year average with again, Minnesota and North Dakota running 43% and 32% slower than normal.

Weather-wise much of the area throughout the Corn Belt is expecting relatively decent rain totals over the next week, with much lower totals expected in the areas that need drier weather the most.

Outside of US production many traders credited yesterday's move lower to reported progress when it comes to Russia allowing unhindered Ukrainian grain exports. However, much of what was seen as progress yesterday was simply Putin reiterating that he is more than willing to work with governments throughout the world to reopen grain flow, so long as sanctions are rolled back. 

With the EU approving an oil embargo and the US remaining steadfast in their refusal to even consider rollbacks, it's difficult to see what progress was made. Though it is clear traders are cognizant of the fact that millions of tonnes of grain remain present in the global pipeline, even if they are not easily accessible or cheap.

In other news, even after a tumultuous month of trade, the major stock indices finished May close to where they started it. As of late traders have seemed to turn long term bullish on the idea the Fed will do what is necessary to cool inflation in June and July and work to get back to normal soon after. President Biden had an unusual meeting with Fed Chair Jerome Powell yesterday to reiterate the independence of the Fed, but also to remind folks that tackling and lowering inflation is his number one domestic priority.

Quantitative tightening officially kicks off today, with the Fed set to have their June meeting in two weeks. 

Export inspections yesterday were decent for corn, below expectations for soybeans and with today being the official kick off of the new wheat marketing year, relatively small for wheat. Shipments to China were noticeably smaller than last week's figures, though with China accounting for such a large amount of corn shipped a week ago, that should not come as a major surprise. Soybean shipments are following their seasonal pattern lower as shipments out of Brazil have stepped into the global pipeline.

Looking ahead it will be interesting to see how traders handle the second day of the holiday shortened week after yesterday's rout. The short-term technical picture looks terrible for soybeans with a key reversal lower after a new contract high seen yesterday, though the long term uptrend remains well intact. Corn is currently trading below some key support levels making it that much more important we see buyers return.

Corn down 1 to 3

Beans up 2 to 5