This week’s action:
Corn July up 16 at $6.37
Beans July up 4 at $14.68
Feeders May up 2.65 at $208.10
Fats June up .075 at $163.65
Hogs May down 2.10 at $80.35
Corn Dec23 up 4 at $5.60
Beans Nov23 down 9 at $13.01
KC Wheat July23 up 19 at $8.66
Market Recap:
We are officially entering planting season for a lot of folks in our trade area!
The main news this week was the April WASDE. The numbers posted were mostly in line with trader expectations. The main highlight from the report is the historically tight world balance sheets for both corn and soybeans. Any production issues with US, Russian, Brazilian, or Chinese summer crops will create an immediate problem.
Corn sales to China were announced again this week. Although they have been actively buying lately, the US is still 32% behind last year’s sales pace with only four months of the marketing year remaining. There is talk a boat full of Brazilian beans will soon be on its way to the southeastern US. This would be the first such shipment in two years.
This week, Russia claimed May 18th will be the end of the Black Sea export corridor agreement. This after Russia agreed to extend the deal 60 days just last month. Disagreements over the inspection of boats as well as economic sanctions still levied on Russia by the West has led to this. Russia’s Foreign Ministry said this week “there is no need to talk about further extension of the Black Sea initiative after May 18”. Russia is demanding progress on fixing problems with its own food and fertilizer exports.
China’s ag ministry announced a 3-year action plan to reduce soymeal inclusion rates from 14.5% to 13% by 2025. It will be interesting to see how this plays out as the US is set to launch many new soybean processors soon.
Forecast:
Spotty rains are forecast in the upcoming week. Rain would certainly be welcomed in the western corn belt but there are areas in the east that wouldn’t mind drying out for a little while. The worst drought areas in the western corn belt will likely remain dry into May.
Economy:
Floating rate loans have some investment firms struggling to make payments on office buildings and multifamily units. U.S. office space vacancy rates are at their highest levels in 30 years. Almost 20% of office space in America’s largest 50 metro areas is vacant. An office park in Denver recently defaulted on a $134 million note. Loan delinquencies on office space in Denver was 18% in March.
Veritas, a private equity firm, defaulted on a $450 million loan backed by rent-controlled apartment buildings in San Francisco. A 3,200-unit apartment complex in Houston was foreclosed this week. It was purchased for $230 million during the pandemic buying spree. Green Street estimates the value of apartments are down approximately 20% from its peak as interest rates approach 8% and rent growth is slowing. Around 72% of multifamily properties financed with Commercial Real Estate Collateralized Loan Obligations didn’t earn enough rent to cover their debt payments in March. According to Trepp, $270 billion in commercial mortgages held by banks are set to mature this year. Almost $1 trillion matures over the next five years.
Demand for vacation/second homes is now 52% below pre-pandemic levels.
Something that probably means nothing:
Italy’s birth rate set a historical low last year with less than 7 births per 1,000 residents.
Enjoy your weekend!