Written Commentary
OPENING COMMENTS
Geopolitics:
A grain vessel was struck by a Russian missile in the Black Sea port of Odesa yesterday. This comes just hours after Ukraine and US officials made solid headwind on a potential ceasefire deal. Wheat values are unchanged to slightly lower with little reaction to the news, but this could cause some logistical disruption in the Black Sea.
Macroeconomics:
Today’s CPI data may be relief for some worried about tariff discussions causing an increase in inflation. It is still very early, the effects of these tariffs may not be felt for months. Equity markets reacted higher to the news, grabbing onto any supportive news it can find among the changing headlines. Exposure to the stock market is as high as it was in 2008 before the financial crisis. 61% of Americans have some sort of exposure to the stock market. The US equity markets have and will continue to become easier and easier to access by the population as long as regulation stays the same. Liquidity is not as high as it was during the pandemic, but it has tripled in the last 15 years.
Ag Fundamentals:
Following the USDA WASDE report yesterday, focus turned to weather, global trade policies changes, and South American harvest progress as well as quality. Soybean world ending stocks were lowered to 121.4 MMT, 800K MT below the lowest trade estimate. China increased their soybean crush estimate by 2 MMT and the overall world stock-to-use ratio dropped from 30.6% to 29.7%. Corn exports and ethanol usage were left untouched by the USDA. Surprised many who look at record ethanol production and a consistently impressive export program despite tariff news. Canola continues to feel the pain of China’s recent 100% tariff announcement on all Canadian canola products. This effects soybean oil values and looking at the charts overlayed, they are mirroring each other.
Weather:
Scattered light rains will continue across most of Brazil for the next 2 weeks. In that time frame most of Brazil and Argentina will receive less than normal rain by 1-2 inches. Rio Grande do Sul and Parana will receive the least moisture and Argentina is expected to be mostly dry for the rest of March.
USDA’s March WASDE Report
Consumer Price Index (CPI) Inflation Report this morning was 0.1% lower than expected at 2.8% inflation in February. The Core consumer price index was also 0.1% lower than estimates at 3.1%. The equity markets reacted friendly to the report.
61% of Americans are exposed to the recently volatile stock market. This is the highest percentage of the population since the 2008 financial crisis knocked some people out.
May Soybean Oil Overlay May Canola Weekly Chart
China’s 100% tariffs on Canada’s canola products have also put pressure on nearby soybean oil prices in the US.
(Canola in yellow and soybean oil in green.)
EXPORT & WORLD NEWS
South Korea bought about 133K MT of animal feed corn in an international tender yesterday.
Malaysian palm oil futures were basically unchanged overnight, up 1 ringgit at 4489.
Daily Trading Limits: Corn $0.30 (expanded $0.45); Soybeans $0.85 (expanded $1.30); Minneapolis Wheat $0.60 (expanded $0.90); KC Wheat $0.40 (expanded $0.60); Chicago Wheat $0.40 (expanded $0.60)
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