Morning Comments March 29, 2022

Corn emergence 2

We started the week with the risk-off trade many were expecting for Friday, with nearly every commodity from wheat to oil finishing lower on the day. When the dust settled, we saw May corn with a surprisingly strong close, comparatively speaking down 5, while May wheat was down 45 and May beans lost 46. Oil was down 7% on the day.

This morning kicked off the first round of in-person peace negotiations between Russian and Ukrainian representatives seen in weeks. This comes after reports the Russian billionaire taking part in negotiations as well as the Ukrainian representatives suffered from a suspected poisoning at the last round of talks held in Kyiv in early March. 

Confidence appears high that talks may result in a ceasefire this morning, as many point to Russia's slow withdrawal from the area surrounding Kyiv and announced focus on Eastern regions of Ukraine as indicating a potential loss in desire to completely 'liberate' Ukraine as once proclaimed. 

Russian officials continue to play hardball with the West however, reiterating their warning of a harsh response if any NATO country were to enter the fray as well as continuing to push the nations they deem as unfriendly to pay for their energy needs in rubles. This morning the Kremlin announced a plan with options on how to take part in the transactions will be finalized by month end. This move is an interesting one as we have discussed prior, as it forces nations trying to cripple Russia's economy through weakened currency to actually prop up the currency through their energy purchases. 

It is interesting to note that Russian analysts claim wheat exports out of the country are only slightly below last year's pace for March, with continued shipments expected in April. Shipments out of Ukraine are also continuing, though at around 10% of previous levels seen.

We are seeing some optimism when it comes to Ukrainian production potential as well, as Russian forces appear to be shifting some of their focus. Weather is starting to warm in certain parts of the country, with images of Ukrainian farmers applying nitrogen to wheat and starting Spring fieldwork seen on social media. 

Outside of what is happening in the Black Sea, we are continuing to watch China struggle with Covid as cases continue to surge in areas that have already been subject to lockdowns. Oil was down hard yesterday as the announcement of the Shanghai lockdown caused many to wonder what will happen next. Shanghai accounts for around 4% of China's total oil demand, and with other provinces still seeing surges in cases even after attempts at stringent controls the idea lockdowns will be lifted by early next week is appearing unlikely.

Here in the U.S., we are watching a concerning increase in Bird Flu cases as we head into spring. Currently there are 44 flocks with active and confirmed contamination, with 59 flocks having been affected since the start of the year. So far it is believed over 14 million birds have been destroyed in an attempt to control the spread of the virus, that is of no risk to humans, with continued expansion likely into early summer as migratory birds continue to move. 

Export inspections were solid for corn last week, with just over 63 million bushels shipped. Of the bushels shipped just over 18 million went to China, with Japan and Mexico in for a large piece of the export pie as well. Sorghum shipments were up a bit from last week and at a new marketing year high, while wheat shipments were decent but below the weekly pace needed yet again. Soybean shipments were in line with weekly needs. 

Looking ahead, we will be waiting for a statement from both Russian and Ukrainian peace negotiators expected to come after today's talks wrap up. It appears both sides desire peace, though the big question comes as to what it will take to make that happen. 

Weather looks to be wet again in parts of the Southern Plains, though it appears much of the rainfall will start a bit further to the east than desired. We are expected to see above normal rainfall and cooler than normal temperatures throughout much of the Eastern Corn Belt into the first half of April, likely starting some chatter of planting delay concerns in the South. 

There's extra headline risk today, likely keeping things a bit more volatile than normal. Position squaring ahead of Thursday is likely to really get rolling as well. 

Corn down 5 to 8

Beans Steady to 2 lower