On The Money Grain Commentary 11-3-22

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Corn Outlook:

The grains shot up early this week on news that Russia planned to suspend its agreement with Ukraine allowing grain to be shipped from the Black Sea Region. This was in reaction to a drone strike by Ukraine on Russian forces in Crimea. However, prices were caught in a down draft Wednesday from reports that Russia would resume its participation in the agreement. The bottom line is that volatility will remain high in the grains until the conflict between them is resolved. Also, rising interest rates and the strong dollar will offer resistance. Because of this, corn exports are dragging their feet. Last week, inspections were a marketing year low of 16.6 MB. Right now, the pace of shipments is running 32.8 percent below its 5-year average and threatens USDA’s target of 2.150 BB. In other matters, harvest continues at a brisk pace and is 76 percent complete compared to the average of 64 percent.

Bean Outlook:

Soybeans posted sharp gains early this week because of the truckers strike in Brazil and a recent increase in purchases by China. Last week, export inspections were an impressive 94.5 MB with China taking 74.7 MB. Right now, the pace of shipments is running 19.7 percent above the 5-year average. However, this may not last much longer as exports tend to peak around mid-November as China’s interest generally turns to the South American crop. I do not foresee them deviating from this pattern unless adverse weather develops in Brazil. Conditions are favorable now but forecast to turn drier for the next couple of weeks. In other developments, the door will soon close on harvest as it is 88 percent done versus the average of 78 percent.

Wheat Outlook:

Wheat futures leaped on Monday because of Russia suspending the grain agreement with Ukraine. However, they flip flopped Wednesday erasing their gains from news that Russia will rejoin the agreement. Right now, a boost in wheat exports is profoundly needed, as inspections last week were a measly 5.0 MB. Since the end of September, the pace of shipments has fallen 62.1 percent and is running 24.0 below the 5-year average. In other matters, winter wheat planting is winding down at 87 percent, just above the average of 85 percent. However, the crop is off to a rough start at 28 percent reported in good-to-excellent condition, well below the average of 45 percent. This is the poorest rating since 2012. Conditions in Oklahoma and Texas are the worst with a rating of 11 percent and 4 percent respectively.

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