Morning Comments September 15, 2021

Cornboard Field 042221

Markets firmer across the board this morning. It appears as though we have found the low end of where the market wants to trade here in the short-term at least until we know more about what true production looks like and get a better feel for demand.

We saw a bearish reaction to what could have been seen as a bullish report in August, rallying shortly after the numbers came out only to give it all up and them some in the weeks following. Now the opposite seems to be true, with a relatively bearish report from the USDA last week and a recovery of nearly 30 cents from the lows in December corn.

Folks are quick to point out that volume is atrocious though, meaning that though market direction is higher, no one is really tripping over themselves to get a position on. 

News-wise we're hearing a lot of chatter over just what is taking place in Russia and what we're going to see there from an export standpoint. Talk started to circulate Monday night into the day yesterday that Russian officials will be looking to bump the export tax rate there to 70/tonne up from the current 52/tonne rate.

If you remember correctly, a lot of the fire under the market came last year when Russia--the world's leading wheat exporter--decided it would do all it could to manage exports via a tax and quota system. Many thought this would be something that took place for only the 20/21 crop year, believing that a large harvest out of the country this year would prompt officials there to reevaluate its tax structure and possibly eliminate the tax.

This was not the case at all, as it appears domestic prices there remain elevated leaving domestic millers to cry foul, claiming they have to raise food prices if more isn't done.

It is interesting to note how the modernization of storage facilities and growth in farmer marketing knowledge in the country has changed the landscape of how commercial entities there have to operate. 

Gone are the days where the farmer is forced to sell to the exporter off the combine at whatever price he/she is able to get. Now there is a process of negotiation, something that is definitely easier to do as a seller if there is no pressure to move everything in a short amount of time, sound familiar?

Anyway, all of this uncertainty over what the heck Russia is doing when it comes to exporting wheat has some folks on edge. This combined with continued reductions in crop estimates out of Canada and Europe will likely keep the market firm, helping to support corn.

In other news, we are seeing more signs of reopening at the Gulf with nearly all but the Big Three export terminals back online. Basis values are firming up there as well, up over 35 cents or more from post-Ida lows, though still off from pre-Ida values.

With China booking 6 cargoes of Brazilian beans for Oct/Nov yesterday, we definitely need to see more signs of the Gulf being able to get bushels moved when they're needed at harvest time as the premium paid for beans out of Brazil indicates China was willing to pay a little more to ensure they will be shipped.

Speaking of China, hog prices in the country continue to struggle trading to new lows. This and reports of relatively decent yields as the country also begins its harvest season has kept pressure on domestic corn values there. 

Looking ahead we will get updated August crush numbers this morning from the National Oilseed Processors Association as well as updated ethanol numbers. Both won't mean much in the whole scope of things, but data is data.