Today’s Prices
Grain markets finished mostly mixed today, although wheat was higher today. The market is trying to determine if prices rallied enough to factor in loss of availability and loss of supplies potentially out of the Russia/Ukraine region.
Grain Market News
South American 2022 Production
This table shows the average trade guess on what the market is expecting the USDA to say when it comes to South American production.
The average trade guess for Brazilian corn crop is 112.9mmt, that would be down 1.1 from last month.
Brazilian soybeans at 128.2mmt, would be down 5.8mmt from last month.
Brazilian soybeans are down so much more than corn because ¾ of Brazil’s corn crop is suprema corn, which is planted after the soybean harvest which is taking place right now.
Argentina corn production estimated to come in at 52mmt, down 2 from last month.
Argentina beans expected to come in at 42.9, down 2.1mmt from last month.
If these estimates are correct, South American corn production would be down 3.1mmt and South American beans down 7.9mmt.
U.S Ending Stocks: 2021-22 Crop Year and World Ending Stocks
This is our current crop year, our old crop ending stock, that’s how much grain will be left as of August 31st prior to the new crop harvest beginning.
The trade is looking for corn ending stocks to come in at 1.476 billion bushels, that would be down 64 million bushels from last month. But still above the year ago level.
Soybean stock expected to come in at 270 million bushels, that would be down 55 million bushels form last month. But still a little above the year ago level.
Wheat stocks at 633 million bushels, would be down 15 million bushels from last month and down over 200 million bushels from a year ago.
The reduced stock that this trade is expecting is primarily due to the trade expecting USDA to raise exports for corn, beans, and possibly wheat due to losses in South America and losses out of the Black Sea region.
Turning to world ending stocks, the trade expects world corn ending stocks to come in at 299.6mmt, that would be down 2.6 form last month.
The trade expecting global soybean stocks at 88.9, that’s down 3.9mmt from last month.
With wheat expected to come in at 278, down just a fraction from a month ago.
Grain Market News
Corn: Weekly Export Inspections
Weekly corn inspections came in at 62.2 million bushels, the largest of the market year and above the level needed to reach USDA export forecast which is shown in the dark black line.
We do expect our exports to remain above USDA target for an extended period likely into June, and that will likely result in our exports being much above what USDA is currently suggesting.
Soybean: Weekly Export Inspections
Soybeans were a little bit above last weeks at 28 million bushels, and that is above the level needed to reach USDA forecast.
And again, South American crop losses are likely to result in US exports being at or above the USDA target for an extended period.
US prices are competitive on the global market, typically that is not true.
Typically, South America is much cheaper than the US in the March-May timeframe, but US prices are competitive and that should allow our exports to exceed USDA current estimate.
Wheat: Weekly Export Inspections
Wheat export inspections were down sharply for the second week in a row, just 12.6 million bushels, we need 18 million bushels to reach the USDA forecast.
It will be interesting to see if the lack of availability out of the Black Sea region will cause our exports to increase significantly over the next couple of months.
March Corn Chart
Todays May corn chart, corn prices were very gradually and consistently working higher in a 2-step forward 1-step backward kind of trade through most of the Fall and Winter.
But the war in Ukraine has caused prices to explode to the upside with May corn futures gaining about a $1.25 in just a little over a weeks’ time.
When the market was in a consistent gradual uptrend, minor rallies resulted in minor corrections.
As we move forward, explosions to the upside can cause collapses to the downside and create extremely volatile trade. That is what we expect in the weeks and possibly next 3-4 months to come.
March Soybean Chart
Soybean prices hit some harvest lows in October and then we began a very gradual rally post-harvest.
Then South American weather turned threatening and that allowed the market to accelerate to the upside and then Russia invaded Ukraine causing another explosion and ramp up in prices.
Similar to corn, when markets begin to explode to the upside they can collapse very quickly, and we expect an extremely volatile trade in the soybean market as well over the next 3-5 months.
March KC Wheat Chart
As corn and beans were rallying in the Fall and early Winter, wheat was choppy and mostly sideways but then the war in Ukraine allowed wheat prices to explode to the upside.
KC wheat went from about $8 per bushel in late February to about $13 per bushel today. That’s a rally of $5 per bushel in about 2 weeks.
The fact that Russia is the number one wheat exporter and Ukraine is the 4th largest exporter in the world has allowed wheat to be the upside leader.
But we must also realize that when wheat goes limit up 5-6 day in a row, its going to become extremely volatile in the wheat market as well. With wide daily ranges and wide weekly rages.
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