Today’s Prices
Grain prices finished mixed today, corn and beans easing back a bit after 2 days of rallying while wheat continues to surge on with the Russian/Ukraine war.
Grain Market News
Global Wheat Exporters (mmt)
The European union is the largest exporter but that’s a combination of many nations.
As an individual nation Russia is by far the largest exporter of wheat in the world, Ukraine would be the third largest exporter as far as an individual country.
We are talking about a major exporter and producer coming from the Black Sea region.
Grain Market News
Corn: Weekly Export Sales
Even before the Russian/Ukraine war began we mentioned that US exports were likely to be larger than USDA expected due to the massive losses in South America. The USDA has not fully accounted for this yet in their balance sheet.
We can already see from a weekly export sales chart the last 6 weeks of all seed exports above the level needed to reach USDA export.
When we combine not only South American crop losses due to drought but lack of availability out of the Black Sea region, exports are likely to run well above the level needed.
We believe when the year is over our corn exports are going out be significantly above USDA current projection.
This important because exports being above will reduce ending stocks.
Soybean: Weekly Export Sales
We’ve seen a tremendous increase in US exports over the last 5-6 weeks, most of that due to the fact that South America has lost a tremendous amount of production. Somewhere between 1 to 1.2 billion bushels of soybean production has likely been lost in South America.
Now the Black Sea region of Russia/Ukraine is not a large producer of soybeans, but they do produce a lot of sunflowers and sunflower oil is exported out of that region. That could allow for larger US exports of soybean oil which would support our crush.
Bottom line is that US soybean exports are expected to continue to run well above the level needed to reach USDA export forecast. Us soybean exports could end the year well above the USDA target and that also could lower US ending stock for soybeans.
Wheat: Weekly Export Sales
We’ve seen a few very good weeks but a number of very poor weeks of US export sales for wheat. At this point we are likely tracking very close to USDA’s target which needs 312 thousand tons per week.
But with Russia and Ukraine not available to ship at this time, US exports could see an increase in the weeks to come.
South America is not a major player when it comes to wheat exports and therefore, we have not seen any major increases in our export sales due to the South American drought.
The Russian Ukraine war could add additional sells to the US.
One example is Egypt, Egypt is the largest buyer of wheat, over the last few days Egypt has been tendering or looking for wheat with no Black Sea offers.
This is going to be consistent for Egypt, but also other countries are going to have to look elsewhere. Therefore, US wheat exports could benefit over the next 60-90 days and US wheat exports could end up being above USDA’s estimate as well.
Weekly Ethanol Production
Ethanol production did decline to 997 thousand barrels per day, just slightly below the level needed to reach USDA current corn use estimate.
Weekly Stocks of Fuel Ethanol
Stocks did decline to 24.993 million barrels, that’s still well above last year, but keep in mind as we get beyond covid our driving mileage and fuel consumed is expected to be similar to pre covid level.
That should allow for strong demand from ethanol and to keep stocks from building up too far.
We would not be surprised at all to see our ethanol stock decline seasonally now through middle of summer.
One of the items that leads us to believe that ethanol should remain strong is that ethanol swaps are trading around 2.36 per gallon while gasoline is trading well above $3 per gallon.
So, ethanol is about 70 cents below gasoline per gallon.
May Corn Chart
Corn prices exploded to a contract high last night, but corn prices did pull back over the course of today’s trade. Corn closed about unchanged in the May contract while new crop closed lower.
The gradual uptrend allows for corrections along the way, but as the market explodes to the upside corrections are likely to be much more significant and any sign of a ceasefire between Russia/Ukraine could cause a sharp down day or two.
Our next level of chart support is likely to come in around the $7 level, that doesn’t mean that the market can’t go lower but this will be the next level on the chart that traders may be looking for if we see a correction. That’s about 25 cents below where we closed today.
May Soybean Chart
Soybean prices did not takeout last week’s high, at least not yet. The trend is still up but beans are not seeing the market stream to the upside like we are seeing in the wheat market.
If beans don’t see additional friendly news this market could set back to the 16.30 level, that’s the breakout level from a spike high we produced in February. That would be the next level of chart support on a further break, that’s about 30-35 cents below where we are currently trading.
May KC Wheat Chart
Wheat prices have exploded over the last week, in fact wheat in just a little bit over a week’s time has rallied $2 per bushel with KC wheat trading up to 10.78 today versus 8.78 just about a week ago.
The global wheat market and the fact that wheat is a food staple is allowing wheat to be the upside leader as Russia contuse to invade further and deeper into Ukraine.
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