6.3.22 Market Commentary

Today marks 100 days since the Russian invasion of Ukraine.

This week’s action:

Corn July down 48 @ 7.28

Corn Dec down 41 @ 6.90

Beans July down 31 @ 17.00

Beans Nov down 14 @ 15.27

KC Wheat July down 1.15 @ 11.21

Feeders Aug up 7.70 @ 173.50

Fats June up 1.20 @ 133.25

June Hogs unch @ 110.175

 

Seasonal Averages:

Dec corn Feb 1 – today: $6.77

Dec corn since Russian invasion: $6.96

Nov beans April 1 – today: $14.99

July KC wheat since Russian invasion: $11.34

**We are about 80% through a typical corn seasonal sales time frame with about 30 days remaining.

**We are about 40% through a typical bean seasonal.

 

Recap:

The latest Planting Progress pegged corn at 86% (87% 5-year avg) and beans at 66% (67% 5-year avg) planted. Russia has asked to begin exporting grain stockpiles out of Ukraine using “humanitarian corridors” in exchange for the West dropping various economic sanctions. A meeting is to negotiate the details is scheduled for next week in Turkey, although many are skeptical an agreement can be made. This news, along with respectable planting progress and a non-threatening weather forecast, has made for an ugly week in both the corn and HRW wheat markets. December corn is about 70 cents below the May 16 high of 7.66. July KC wheat is off about $2.50 from its recent high of 13.79.

The first Crop Ratings will be released Monday. Expect high ratings.

Old crop corn basis has been quite firm lately. Old crop soybean basis is softer than mid-May in the Western belt as many processors are now bidding vs the August futures month. The grain industry is struggling with rail logistics so be weary of potential rail cancellations and elevator corn flooding local markets.

 

Forecast:

The 10-day forecast remains non-threatening with temperatures expected to remain in the 70s/80s and the decent rain coverage in the coming days.

 

Outside Markets:

New Orleans urea prices have dropped substantially from the March high of $935/ton. It traded as low at $475/ton this week, which we haven’t seen since last August. Lumber has also been getting hammered (pun intended) recently, which is attributed to a housing/apartment slow down as higher interest rates are hitting the market. It is currently trading around $600/contract compared to its early March high of over $1,200/contract. The national average gas price is $4.76, which is the highest on record and 50 cents higher than a month ago. (Nebraska at $4.47) The July crude contract hit $119/barrel to start the week, which is its contract high. Natural gas is about $1 off its recent highs but still more than double January prices.

 

Something that Probably Means Nothing:

Our last “wet” year was 2019.

On May 19 that year, Dec corn was trading around $3.75. It rallied to $4.69 on June 18 (+25% move) before falling to harvest lows of $3.54 on September 9 (-25% move).

December 2022 corn was trading $5.86 the day of the Russian invasion. It rallied to its high of $7.66 on May 17 (+30%).

IF we have a repeat of 2019 matching percentage moves, a 30% drop from $7.66 would peg December futures around $5.35.