UPDATE for May 5th 2023
Meeting Regarding the Grain Corridor and Market Woes
A meeting regarding the “Grain Corridor” deal is being held today. Headlines from this conflict and the results of these negotiations are a couple of the very few things that the corn market has going for it right now. Weather has been cooperative for planting across the Corn Belt this week. On Monday the USDA showed that the U.S. corn crop was 26% planted which is on pace with the 5-year average. All states were running at or above their 5-year average except: Colorado, Iowa, Michigan, Minnesota, North & South Dakota and Wisconsin. This week planters have made great progress in the Corn Belt which will also come in to play as we get the first look of the new-crop balance sheets next Friday, May 12th.
Corn exports set a record last week as they fell to their lowest weekly total on record. Definitely not the kind of record setting we need. For the current marketing year net corn sales are down 315,600 MT. This is especially concerning because typically February through June is a period in which the U.S. sees stroncorn exports. But this year we have negative export sales for the first time in 20 years, most of this is a result of the “flash cancellations” from China of 562,800 MT.
The USDA reported on Monday that 19% of the U.S. soybean crop was planted last week which is well ahead of 2022 when only 7% had been planted. Strong domestic demand for soybeans continues as March crush numbers were higher than the trade had expected, coming in at 198 million bushels. U.S. exports have not been great though as the much cheaper Brazilian soybean crop has reached the market. Since the election of the new Brazilian president the relationship between China and Brazil has strengthened prompting some real concerns regarding the fate of U.S. exports to China going forward.
Russian officials reported that there had been an assignation attempt against Putin on Wednesday as two drones crashed into the Kremlin grounds. Russia’s electronic warfare system sensed the drones and were able to take out the unmanned aircrafts before they were able to finish the mission. Russia is calling it a terrorist attack targeting Putin and is blaming Ukraine for the incident. Some U.S. officials are skeptical that Ukraine was behind the event and believe that Russia likely staged the attack themselves. The officials point out that the air defense systems in place to guard the Kremlin are much too sophisticated for two Ukrainian drones to have ever been able to get that close. They see it as Russia’s “excuse” for escalating the war which could also, unfortunately, include the use of nuclear weapons. Russian generals have repeated warned that any attack on Russian territory would face a harsh response.
This war has been ongoing for almost 15 months now with no end in sight. That has prompted key Ukrainian allies to come together to work on new ways to assert penalties against Russia in hopes of tightening the loopholes that have allowed Russia’s economy to continue to function quite well. The “packages” are being specifically designed by each individual nation but will work in coordination with the others. The way it is now Russia has been able to circumvent sanctions through existing loopholes which will no longer exist once the Group of Seven leaders meet in Japan later this month. Some of the plans include:
• Banning any goods that are transitioned through Russia.
• Banning all goods that are transported with vessels that turn off navigation systems.
• Canada is working on actions related to human rights.
• Japan and the U.S. each have their own “packages” they are working on, but no information has been shared regarding either of their exact objectives.
Details surround each of the measures are still unknown but what is known is that the focus of the G-7 will be to eliminate Russia’s ability to evade or circumvent current sanctions especially those related to restricted goods and technology used for military purposes. (Bloomberg)
In their April edition of the North American Agribusiness Review Rabobank presented a mixed outlook for key U.S. commodities. Shown below are a few of their graphs depicting Rabobank’s current outlooks for both corn and soybeans.
Precipitation amounts for today and this weekend have varied widely this week. Today now looks to be mostly dry with only a trace forecasted for most areas that do receive any rainfall. As a warm frost enters the state from the south tomorrow rain chances and temps increase. Thunderstorms are possible Saturday evening south of I-80 and to the north, hail and isolated downpours are possible. The forecast from the Storm Prediction Center is the first map.
By Sunday the warm front is expected to approach southern Wisconsin. Dew points are predicted to rise into the mid 60’s producing the first really muggy day of the year. With warm temps and muggy air in place the SPC is warning of the development of instability in the atmosphere with CAPE readings from the GFS reaching significant levels. (First map below) If the right ingredients come together strong to severe storms are possible, more confidence in the outlook for Sunday will evolve as we get closer. (Map 2 from the SPC).
