Corn and Soybean Weekly Update 11/4/2022

Nov 4, 2022

Corn started the week off strong after Russia announced its withdrawal from the safe passage agreement. Corn gapped higher at the start of Sunday night trading jumping nearly 20 cents when trading opened. December corn opened this week at $6.96 and ended the week at $6.81 giving up all of its gains after Russia changed its tone of the agreement and announced they were just suspending the agreement temporarily. Despite giving up 15 cents this week corn is still above last weeks close price by just a quarter of a cent. Domestic corn prices continue to rise with basis levels getting stronger despite corn harvest moving along quickly due to dry weather. Export sales have been weak for corn with Ukraine and Brazil both being more competitive with corn pricing.  U.S. corn exports also got a more bearish tone from Mexico announcing its plan to eliminate GMO corn imports by 2024. Mexico is a major importer of U.S. corn, and this could mean even less exports in the future.

Soybeans leading the way in the grain markets this week getting initial support from Russia backing out of the safe passage agreement. As corn and wheat lost traction after Russia rejoined the agreement, soybeans got traction from the vegetable oil market. Soybean oil has rallied 8% this week getting back to highs we haven’t seen since June and Palm oil posted gains of over 10% this week. Soybean export sales have not been struggling like corn has with 30.5 million bushels sold last week and commitments 1% higher than last year at this time. China announced this week it might scale back its zero tolerance Covid policy to be more realistic, which gave some hope to fix their struggling economy. The November soybean contract went off the board this week and January soybeans posted a 62-cent rally this week. January soybeans closed at $14.62 ¼ which is the highest price since the middle of September.

Wheat had a back and forth trade this week with the big news being the back-and-forth participation from Russia in the safe passage agreement. There is still some concern if Russia will renew the agreement when the current one expires on November 19th. Russia has hinted at modifying any new agreements to allow them to export fertilizer and commodities more easily. There is also developing problems with drought in Argentina which is cutting yield estimates and crop conditions. The current estimate for Argentina wheat production is 13 million tons, which would be 10 million tons lower than last years production. Australia has had the opposite issue this year with heavy rains flooding many areas which could cause damage forcing some of the wheat to be downgraded to feed grade. Chicago wheat still posted gains over last weeks close after a 55-cent gap higher on Sunday night. Last weeks close was $8.29 and closed this week at $8.47.

 

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