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. China, not to be outdone, also announced that there was an unidentified object near the port city of Qingdao that they are ready to shoot down and claimed that the U.S. has flown high-altitude balloons over their airspace 10 times in the last year. This situation adds uncertainty to the commodity markets. China is one of our largest customers, so any conflict that arises would probably have a negative impact on our markets.
Corn
Corn futures have traded in a tight range since last week’s USDA report with not much new information to trade on. March futures are sitting just above their 50 week moving average. U.S. corn exports should pick up when considering the delays in shipping out of the Black Sea region, but it will be difficult to get caught up to pace.
Brazil’s AgRural estimated that the 2022/23 Brazilian safrinha* crop is now 25% planted versus 42% last year. Brazil is getting a lot of moisture which is causing the delay.
*Safrinha is Portuguese for “little harvest” and is the name for Brazil’s second corn crop. Their climate allows for 2 corn harvests per year.
Wheat
Ukraine’s total grain exports are down 28.7 percent in the 2022/23 marketing year at 29.2 million metric tons (mmt). We are approaching the one year anniversary of Russia’s invasion of Ukraine, and we are six weeks away from the deadline of extending the Black Sea export corridor agreement. Monday morning, headlines came out that Russia is saying it would be “inappropriate” to extend the deal unless sanctions affecting their agricultural exports are lifted and other issues are resolved. This announcement is putting some risk premium back in the wheat market. Russian FOB values are still cheap in the world market. With the jump in our futures, U.S. wheat is further priced out of the export market and now also priced out of the feed ration.
Soybeans
Argentina is dealing with some record-breaking warm temperatures and dry weather, which is putting pressure on their corn and soybean crops. Soybean harvest is beginning to pick up pace in Brazil but harvest remains well below average at 17.4% complete versus 30% this time last year. Farmer selling is also behind pace.
Other News
We are in the middle of setting spring crop insurance prices for corn and soybeans. Corn currently is sitting at $5.95 with projected volatility at 19% (we were $5.90 last year) and soybeans are at $13.69 with projected volatility at 14%. There are 11 trading days left to price with volatility factors set the last 5 trading days.
