Commentary
Corn and wheat markets are sharply higher today as tensions in the Black Sea threaten grain export shipments. According to Reuters, Russia said they would assume all ships traveling to Ukraine ports to be possible carriers of military cargo and their flag countries to be parties to the conflict on the Ukrainian side. Grain shippers are pulling out as they don’t want to be caught in the middle of war violence. Russia attacked grain terminals and port infrastructure in Odessa for the second night in a row as a revenge strike for Ukraine’s attack on the Crimean Bridge. Ukraine officials say the Odessa port will continue to export grain. Russia followed that news with an ultimatum that the UN has 3 months to implement its demands in order to resume the Ukraine Deal. Once implemented, Russia says it will instantly resume the protections Ukraine enjoyed in the agreement. The 6 to 10 day and beyond forecast is hotter and dry for the Midwest and could provide a suboptimal finish to July. With the forecast as it stands 60% of the WCB will be in a 50 to 80% of normal rainfall for the month as it stands right now. In my opinion the bull will need to be fed here to keep the corn and wheat markets to keep moving up. Its not demand that is igniting the rally, but supply side concerns amid a potential heat dome moving into the Midwest in my opinion. Showers are still active in many parts of the Midwest in the 1 to 5 day. Beyond that there is much uncertainty. Note , harvest will begin in earnest in the Midwest in less than 2 months and in the South in a few weeks if it hasn’t started already in some areas. Weather needs to stay hot and dry in my view to prod the USDA to adjust the massive 2.26 billion bushel carry out in corn. Aside from crop scout crop tours, the USDA wont make any adjustments until their next WASDE report on Friday August 11th.
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