Grain Comments: 05-18-2023

Good morning:

Corn and soybeans continue to grind out new lows with wheat contracts the more active player through mid-week, with the spot Chicago July contract moving back towards early-month lows, and MN and KC wheat building on yesterday’s bearish reversals. Issues with the U.S. HRWW crop are ongoing but well-known by the trade at this point, though heavy expected rains are on the way this week. Ukrainian vessels will presumably resume movement after being shut down over the last couple weeks on safety concerns up into the deadline, though we’ll likely go through this all again in 60 days as Russia continues to produce the same rhetoric.

Rain was mostly light and scattered in the western Plains and belt over the past 24 hours, including a heavy isolated patch in the Texas panhandle, for what it’s worth; scattered action continues west this morning with a bit larger event in Minnesota. Rain will move through today and tomorrow, but amounts look light overall, save for heavier numbers in the panhandles, Oklahoma, and southern Kansas. 6–10-day maps are now bringing above-normal rains into western crop areas, still dry center-east, with 11–15-day forecasts still dry throughout. Temperatures remain warm over the next two weeks.

Global economics are an underlying factor that continues to drive market activity. One that is gaining attention is what is taking place in Argentina where the government is out of funds. This, along with lower yields, has prevented Argentine farmers from selling any commodities. Farmers believe their commodities will continue to appreciate in value as the peso declines and the US dollar rallies. Another country that is showing signs of economic stress is China where consumer spending and demand has not recovered as quick as hoped following the lifting of Covid restrictions. As a result, China’s commodity demand has been slow to rebound as well. This is most noted in the country’s pork industry where the government is now buying inventory for federal reserves to help support prices. The economy is also very much a concern in the United States where a possible default could take place. Even without this potential default US consumers have altered their spending in recent weeks in an effort to reduce the impact from inflation. Most of this is in the food service industry where consumers are not eating out as much and buying cheaper cuts of meat for at home. The question now is if consumers will alter summer travel plans to further impact the US economy. The Black Sea corridor has been extended for 60 days and now trade will be interested to see if shippers start sending vessels into the region.

Have a great day!