MARKET UPDATE

Futures Prices Close

Overview
Yesterday we saw Russia & Ukraine headlines steal the show before close. As a missile accidentally landed in Poland. Intially everyone thought it was a Russian missile. However, it was revealed that the rocket actually came from Ukraine, as Ukraine shot down two missiles, and pieces of the missile landed in Poland. Ukrainian President is still denying that it was a Ukrainian missile. Following the initial news, grains rallied yesterday after trading lower for the majority of the day. Grains are lower here today giving back yesterday’s gains with the news that it was Ukraine’s missile, not Russia's. Grains also under pressure with Putin suggesting they extend the grain export deal agreement.

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Today's Main Takeaways

Corn
Corn holding up the best out of the grains with news of a large sale this morning. The sale being 1.87 million metric tons of corn to Mexico, with 1.2 million for this year and the rest for next year.

Yesterday we saw one of the larger trading ranges we have seen in a while for corn, as for the last few weeks we have continued to chop around in a tight range. Currently, we are about a dime off a major physiological support at the $6.50, so hopefully, we can see corn find support here.

So the war headlines are being monitored, but its becoming increasingly likely we see the grain export deal renewed, which has prices under pressure today. If it is renewed we could likely see corn continue to slip here, as corn has also been pressured by weak exports and large crops over in South America.

Also affecting the corn market, we have a 3-month low in the dollar. Which many could argue either side, saying that the dollar will rebound or won't. Then of course we have the war headlines. We will have to wait and see if these headlines continue to escalate or not, or if they will just brush it off to the side and things return to normal.

South American weather hasn’t shown much for headlines or gave anyone anything to chew on so far. But as we near the end of the year this will be a factor being eyed on heavily going forward.

U.S. final yield also continues to be up for debate. With the recent USDA report giving us a slightly higher number from 171.9 to 172.3 bpa. So many think we may continue to see the USDA lean towards raising yield again.

Overall long term, I see some potential for corn going into the new year. But as always there will plenty of factors that go into what direction we prices go. To see higher prices here one would love to see demand increase as well as some possible South America headlines.

Dec-22 (6 Month)

Soybeans
Soybeans sharply lower here today (-30 cents), giving back all of its gains we saw yesterday. Now trading around where it was at on November 10th.

No major updates from South America or Brazil. Brazil should be getting close to around 3/4 of the way through their planting and are running slightly behind pace, but is currently nothing note worthy to push around the markets. Im still slightly concerned that Brazil is expecting a pretty large crop. Argentina is still struggling, but they have started to get some meaningful rain.

The NOPA numbers (below) came in basically as expected, so there was no real numbers for bulls to chew on, and it doesn't change much of anything.

NOPA Crush Report

October U.S. soybean crush came in at 184.5, basically right where it was expected. However it was still a large increase from September's crush of 158.1 million bushels. Which was also a very low number seasonally.
Soy oil stocks came in at 1,528 million pounds. Just below trade estimates. Last month was 1,459 million.
Soy meal production came in at 4.305 million tons. About on par with last years numbers but still far above the 5-year average.

We also have the COVID lockdown situation still in play in China. Which isn't helping demand. U.S. and China relations also remain a headline to keep your eye on. So going forward, the biggest take aways with be Brazilian/South America weather, and China.

The strength in soy oil recently has been majorly beneficial to helping support soybean prices, but we have seen prices take a step back here trading sharply lower, down about -4% today.

Soymeal & Soyoil

Soymeal down -3 to 404
Soyoil down -2.57 to 72.10

Soybeans Jan-23 (6 Month)

Wheat
Wheat lower today along with the rest of the markets. Down a little over a dime and in the middle of a wide trading range.

Biggest headline is currently the Russia and Ukraine situation. As we touched on the missile situation in the overview portion. But this has created some uncertainty. So we will have to see if any new headlines arise and if NATO will plan to do anything. Nobody really knows, but if the war leaks into countries such as Poland one would imagine we could see wheat prices significantly higher, but no one really knows where this will go. We also have Putin suggesting that Russia will go ahead and renew the grain export deal which won't be beneficial to prices if they do.

Overnight we saw December wheat with a low of $8.01 1/2, with yesterday’s low being just under the $8 mark. Hopefully we can hold the $8 level here for the rest of the day otherwise breaking that support could open the door for some lower prices.

As for weather, there is really nothing new. The U.S. winter wheat crop has slightly improved as of recent but is still in one of the worst conditions in recent history, so we can expect this to add support to the markets. The USDA currently has WW conditions at 32% rated good/excellent vs 46% at this time last year, so you can put into perspective what condition this crop is in.

Going forward, I have a slight bullish tilt on wheat currently looking longer term. Of course if this Russia and Ukraine deal gets extended we will likely see prices lower. But that news will fade and markets will start to trade other factors such as production uncertainties and weather. But for now the markets will continue to war and weather headlines.

Chicago Dec-22 (6 month)

KC Dec-22 (6 month)

MPLS Dec-22 (6 month)

Other Markets

Crude oil down -1.56 to 85.35
Dow Jones slightly down -30
Dollar Index up +0.120 to 106.42
Cotton down -0.21 to 86.76

News

The recent CPI has many hoping inflation is cooling. But the UK's inflation is not easing, just hitting new 40 year highs.
Russia is expected to extend the grain export deal
U.S. household debt climbed at the fastest pace since 2008 in Q3
U.S. credit card debt increased by the most it has in 20 years. Up 15% from last year.
White House requests $37.7 billion in new Ukraine funding
Layoffs by big tech companies hit 120,000, already surpassing the 2001 dot com bubble of 100,000 layoffs.

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