Commentary
It is my belief per the average trade guesses that the grain market is looking for a reduction of around 25 million bushels each of corn and soybean ending stocks in Friday morning’s April USDA S&D Report. Wheat is seen fairly steady this month. Global soybean stocks are seen down around a million tonnes with corn and wheat steady. S.A. corn and soy production numbers are seen mostly lower across the board, save for a 1.1 million metric ton rise in Brazilian corn. The acreage revealed last week won’t make the April WASDE, that will be in May. Fridays report in my view has the USDA making immaterial changes to the US carryout and allows for offsetting changes in the Brazil and Argentina crops to hold SA production steady. With over half of the 1st corn crop in Brazil harvested and the second crop (3 times its size) just finished planting, the potential for total production recovery is still available in my view. I included a chart of July22/Dec22 corn. With less corn being planted that affects new crop Dec 22 corn versus a big Brazilian crop that maybe coming on the potential of agreeable weather in Brazil, I’m wondering if there is a chance for the July 22/Dec22 corn spread to trade back near parity come June. In outside market news The U.S. Dollar Index is extremely volatile but higher after the Fed minutes planning to shrink balance sheet and post larger rate hikes. The Ukraine situation has seen no changes today in my view and the USDA once again brushed off calls for opening the CRP acreage penalty free. Not only did the Sec of Ag say it was infeasible to convert land quickly to production but the land is marginal and converting it would be in opposition to the Administration’s global climate change policy. July22/Dec22 corn spread chart below. I do not have any recommendations as of yet, as I want to wait until after Fridays report to possibly enter into the market.
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