Grain Comments: 03-14-2023

Good Morning

Russia is suggesting renewing the Black Sea export deal for only 60 days. The previous renewal lasted 120 days. Russia’s Deputy Foreign Minister Sergei Vershinin said the country’s future stance on the agreement will be determined by the tangible progress on the normalization of Russia’s exports.

0.25” to 1.5: of rain fell in Central and Northwest Brazil, Paraguay, and West-ern Argentina according to Commodity Weather Group. The latest European model is drier for Argentina in the 6-10 day but wetter in the 11-15 day.

Outside markets continue to be a main factor in price discovery in the commodity market. The main one of these is the US dollar which remains elevated compared to other currencies in the global market. This is softening export demand, even where the US is competitive on commodity price. We continue to see concerns over US interest rates as the economy has not slowed, even with rates already up. There are now thoughts the Fed will eventually take the rate to 6% which is higher than first thought. What may be a greater concern is that rates are forecast to remain high for an extended period of time. This will start to impact cash flows in the near future. The recent collapse of two US banks has tempered rate hike ideas though, with some economists now expecting a minimal hike if we see one at all in next week’s Fed meeting. Trade is also concerned with the slower rate of economic recovery in China following Covid, which is further dampening commodity market interest from the managed money crowd. While we will see support from fundamentals, buying from this group will be needed to make another leg up in the market. One benefit for the market recently has been a need for risk premium in futures. US production is forecast to be record high this year, but stocks to use will hold at rationing levels. Until we see this improve, liquidation will remain limited.

Have a great day!