On The Money Grain Commentary 4-13-23

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Corn Outlook:

At this time of the year, the focus in the grains is mostly on weather. However, the global geopolitical environment may take greater importance today. For instance, the U.S.’s dominance as the world’s superpower is declining as it is strongly being challenged by China. Their recent escalation of military activity around Taiwan is an example. Furthermore, more global financial transactions are being consummated in the Yuan which is a direct threat to the dollar’s status as the world reserve currency. Also, Russia is threatening to renege on the grain agreement with Ukraine next month. These issues could trump weather this season. Meanwhile, corn planting is just getting underway, and exports are run of the mill. Last week, inspections were less than expected at 31.6 MB with shipments well under the pace needed to reach USDA’s target of 1.850 BB.

Bean Outlook:

My concern for soybeans is that the increased escalation of China’s military activity around Taiwan puts U.S. exports in the crosshairs. China makes no secret of their intentions for reunification with Taiwan and could be making preparations for increased aggression. If so, they will greater source their soybean and corn needs from South America. Be aware that they are currently increasing their ties with Brazil and Argentina, as well as our other allies. This further jeopardizes the U.S.’s status as the world’s reserve currency and could keep upward pressure on interest rates to attract foreign capital. Meanwhile, export inspections last week improved over the previous week at 24.6 MB. Although the pace of shipments has fallen sharply from November, they are still on track to reach USDA’s projection of 2.015 BB.

Wheat Outlook:

Russia is stone walling on the grain agreement to be renewed next month with Ukraine unless obstacles to their exports are removed. This will continue to keep a cloud over shipments from the Black Sea Region. In other matters, export inspections last week saw an improvement over the previous week at 12.3 MB. However, the pace of shipments has fallen the past few weeks, and it is questionable as to whether USDA’s target at 775 MB can be reached. Meanwhile, the winter wheat crop continues to deteriorate as the rating fell one-point last week to 32 percent of the crop in good-to-excellent condition.

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