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As Heraclitus once said, “The only constant in life is change.” We see this every day in a changing marketplace, weather forecast, geopolitical environment, crop conditions, supply and demand. Aside from that, there have been a few big changes in my life lately as well.
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There’s a lot of uncertainty in the markets to start the week after the failure of Silicon Valley Bank on Friday, and the additional failure of Signature Bank on Sunday. The fallout from this hit the grain and oilseed markets on Sunday night with a selloff in equity and bond markets and crude oil leading the commodity sector lower.
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Grain markets have continued to fall after the USDA’s Agricultural Outlook Forum last week. Other headlines of note include weather in the United States and South America, the Black Sea Export Agreement, the Cattle On Feed report, and the current economy.
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Though there isn’t much fresh market news to trade on, there is growing concern about a spying threat after the U.S. Department of Defense confirmed that more unidentified objects have been shot down over Alaska and Canada.
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Markets are a bit nervous to start the week after the United States shot down a Chinese surveillance balloon over the weekend. China said the balloon was for scientific purposes and had blown off course.
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There isn’t much to talk about in terms of fresh news for the market to trade. Some of the main focuses right now are on the dry weather in Argentina (but they are getting helpful rains), the great precipitation in Brazil that will only add to their production, and poor export demand.
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Rain makes grain, and that’s the main story in the markets this week. Much-needed moisture has made its way across the Plains in the form of snow coverage which was better than expected and setting the wheat market back a bit.
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After the big January World Agricultural Supply and Demand Estimates (WASDE), stocks and acreage reports from the USDA came out last week, I decided to do things a little bit differently for this week’s article. Rather than give you a short-term market synopsis, I’d like to give you a market outlook on some things that we may expect to see throughout 2023 in an effort to help you with this year’s marketing plan.
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The markets were quiet throughout the last half of December as traders were in holiday mode and trade was thin. The end of December marked month, quarter and year end which brought some volatility to the markets as usual.
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Markets have been quiet with low volume and liquidity going into the long holiday weekend with very little fresh news to add movement to the markets. Grain markets will close at their regular time on Friday, December 30th for New Year’s and re-open at 7:30 a.m. MT on Tuesday, January 3, 2023.
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Friday’s USDA World Agricultural Supply & Demand report (WASDE) was pretty much a non-event for all commodities and it was a quiet trading session. The trade was anticipating very few changes.
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The corn and wheat markets were down sharply last week and soybeans were back and forth. Many headlines to consider including crop progress/condition reports, weather forecasts around the world, EPA mandates and China’s Zero-Covid policy.
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Markets are down to start the week on news of increased Covid cases in China and protests in Shanghai and Beijing over their zero-Covid policy.
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This year, U.S. producers were able to get relatively high returns despite a marginally clipped corn yield as some of the increasing input costs are running behind the market rallies. Inputs like seed, rent and machinery tend to rise in a one-year delay.
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The November World Agriculture Supply and Demand Estimates report (WASDE) on Wednesday, November 9th, was the thing to watch last week, but overall turned out to be a fairly boring report across all commodities.
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The major headline over the weekend was Russia’s announcement to withdraw from the grain export corridor agreement. Wheat futures shot up overnight with corn and soybean futures following. The trade had been expecting some type of disruption which limited gains. This story will continue to develop and markets will remain volatile as there is a lot of conflicting information. Both the UN and Turkey say that agriculture product shipments will continue but there is still risk premium being added to the market.