May corn futures were 3 cents lower today at $6.30, May soybeans finished the session down 19 cents at $14.67, and May wheat in Chicago was 17 1/2 cents lower at $6.83 1/4.

Futures tried to rally today but struggled to fund enough buying interest to sustain a rally. Early support came from technical buying, but this brought futures to firm resistance on each commodity and buying interest was quick to dry up. Trade continues to sift through the same fundamental news which is also hindering daily advances. More traders are simply shoring up their positions and moving to the sideline ahead of the month end reports from the USDA. We will soon start to see estimates for these reports, with more of an emphasis on potential acres. Grains stocks are more of a concrete number though and need to be closely monitored as well. The recent break in futures has favored processing margins though and basis has reacted accordingly. We are seeing more attention on the developing El Nino weather system and what impact it may have on global commodity production. Trade is also heavily focused on the FOMC meeting that is taking place for an indication of what will be done with interest rates. Economists have the odds of at least a 25-basis point rate increase at 72%. 

Corn futures struggled today even with another daily sale to China. This one was for 136,000 metric tons for 2022/23 delivery. While this news is positive, China is the only buyer the US has on corn right now, and even with this business, year to date commitments are still 11% below expectations. There is also some question on when the sales were actually made and if the daily reports are simply verification of previously rumored sales. Trade focus remains heavily centered on the start of the US planting season with 40% of the Texas crop seeded. This is 5% ahead of the normal pace. This is easing some concerns over delayed plantings this year, but this pace will undoubtedly slow as fieldwork moves north and reaches areas with heavy snow cover. Analysts from South America have total corn production for those countries down 5.5% from last year at 163.3 million metric tons (mmt) due to losses in the Argentine crop. A few analysts have started to question recent reductions to the Argentine crop though and point to recent rains that may be more beneficial than suspected. Trade is also seeing prospects for a 15% loss in Ukraine production this year. These concerns are being tempered by the prospects for a high US corn crop. Doubts over corn demand are also easing concerns over a loss of production. 

Soybeans were again mixed to start today with the spot contract showing more strength than deferred contracts. We continue to hear rumors of China switching Argentine soybean bookings to the US for origination which is what was credited for yesterday’s nearby rally. Some doubt is being cast on these reports though as Brazil remains well below the US on soybeans and exports are starting to gain momentum from that source. Many of these are likely to the same importers that had soybeans booked from Argentina. Brazil meal is also nearly $50.00 per ton less than the US which does not support a change in origination. US soybean sales are running 10% above expectations which gives us the indication we may see another increase in exports in future WASDE reports. This could easily drop US ending stocks below 200 million bu. Canadian canola exports are up 42% on the year to pressure soy demand and India is reporting a record Rapeseed crop of 11.5 mmt. Total South American soybean production is estimated at 191.1 mmt, an increase from last year of 3.9%. These elevated production volumes are tempering market concern over tight reserves in the US. Long liquidation developed in the soy complex as the session progressed and values sold off substantially. 

Wheat futures continue to struggle from little other than a lack of demand and sparse fresh news. The United States is one of the highest priced sources of wheat in the global market and this is tempering demand for our offers. The EU and Russia continue to dominate global wheat trade, but we are also seeing ongoing sales out of Ukraine. The extension of the Black Sea corridor, regardless of how long it will last, is keeping this wheat flowing into the world market. Several US states saw their crop ratings improve last week which removed some of the risk premium in wheat futures today. 

The short soybean crop in Argentina is starting to impact the country’s crush industry. Officials in the country claim just 30% of its crush capacity is currently being utilized. This is partly from lower yields, but also from slow farmer selling as farmers expect to see higher returns later in the marketing year. Some crushers have also slowed operations due to negative crush margins given the spread between products and raw soybeans. Crushers do report still having 6 mmt of old crop soybeans in reserve and expect to import 7 mmt from Brazil to keep crush volumes elevated. There continue to be reports that another Peso incentive program will be offered to encourage farmer selling, but it is questionable if the Argentine government can afford this given its loss of revenue in recent months. 

The building global banking issues may have a longer lasting impact on agriculture than initially thought. The main issue in the future will be credit as lenders will need to tighten their borrowing to build credit. For a producer this may mean less financing and higher interest rates. This could easily impact future production. Tightening credit may also affect global commodity trade if buyers struggle to get financing for needs. This has been an issue for developing countries for the past several months. An importer that has seen the most fallout from credit recently has been Egypt and this has slowed their wheat buying.