On The Money Grain Commentary 10-6-22

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Corn Outlook:

At one time, marketing decisions in the grains were almost based exclusively on supply-demand, basis levels, and weather. Not anymore. While they are still relevant and must be included, geopolitical and macroeconomic factors must be considered as well. For example, inflation is on the rampage, along with rising interest rates, and a deep recession that is likely to follow. In the meantime, Russia is losing face in their aggression against Ukraine which suggests instability in that region will continue. Meanwhile, corn stocks are shrinking, and yields are expected to decline in next week’s crop report. However, exports are off to a slow start even though inspections last week were a marketing year high at 26.0 MB. They must average 45.6 MB each week if we are to reach USDA’s projection of 2.275 BB. That said, achieving their target is questionable. Currently, harvest is lagging slightly at 20 percent complete versus 22 percent for the average.

Bean Outlook:

Soybeans are seeing headwinds from stocks that are higher than previously thought, a pending record crop in South America, and exports that are languishing. Although inspections last week were a marketing year high at 21.1 MB, they must average 42.0 MB on a weekly basis to reach USDA’s goal of 2.085 BB. Right now, exports are off to their slowest start since 2015. Unless adverse weather develops in Brazil, their target is in jeopardy. For now, conditions are favorable for planting and development in Brazil while Argentina could use moisture. Brazil is projected to produce a record crop of 152.4 million tons. Looking at harvest, it is running behind pace at 22 percent complete compared to 25 percent for the average.

Wheat Outlook:

Of the grains, wheat has the soundest fundamentals. Drought conditions in Kansas and Oklahoma are expanding. Russia’s continued aggression in Ukraine is keeping the market on edge as it is getting more intense. Meanwhile, the export pace is on the upswing even though the dollar is still trending higher. This is partially because China has become a more active buyer. Last week, inspections were 24.5 MB which is above the average of 14.2 MB that must be shipped each week to achieve USDA’s projection of 825 MB. In other developments, winter wheat planting is 40 percent versus the average of 44 percent.

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