Grain Comments: 03-21-2023

Good morning!

The front end of the soybean complex is leading the way this morning after matching a spot calendar year low yesterday; speculative interest in beans and meal remains despite corn wiping out a substantial fund net long. New-crop optimism (bearishness) remains high but old-crop supplies are still on the tight side heading into crucial reports for both next Friday.

Rains have fired up in southern U.S. crop areas and will be the start of an active work week precipitation wise, with decent coverage expected for all but the SW Plains; extended maps are trending a bit more varied but still favoring the wetter side of normal, with temperatures cold up through early April as well.

Argentina was dry over the past 24 hours, but rains will favor northern crop areas over the next week-plus, for what it’s worth, remaining dry south. Brazil again saw rains scattered from north to south yesterday and heavy action will favor the far south in the next ten days, lighter northeast with some dryness concerns lingering for safrinha corn areas there.

The Federal Reserve will meet today and tomorrow and potentially revise its interest rates. For several months we have seen the Fed raise rates in an attempt to slow inflation, but after several banks around the world reported credit issues it was thought we may see the rates hold steady this month. These banks have received bail out funding from several different sources though, which again has economists predicting at least a 25-basis point hike to rates this month. The concern in the domestic market is what impact this will have on consumer demand. Rate hikes up to this point have done little to slow consumer spending which is a main reason why inflation has remained high. Higher rates are starting to be felt by borrowers though, including in the Ag sector. Elevated costs may prevent US farmers from spending as much as normal on crop inputs this year and affect yields. Trade is also monitoring the economy in China where the government has loosened borrowing regulations in an effort to elevate spending. If this starts to benefit the Chinese economy, it could easily lead to elevated commodity demand. Yesterday it was rumored that China was shifting soybean bookings from Argentina to the US due to losses in that country. Trade will be looking for confirmation of these today, along with any indications from the FOMC meeting on potential interest rate changes.

Have a great day!