Markets are sharply lower again this morning with corn down 12, soybeans down 20 and wheat down 20.
China has signed a phytosanitary agreement with Brazil to import the country’s corn, following record Chinese corn imports last year and in the face of reduced supplies from Ukraine. China is also rumored to have bought anywhere from 250-400,000 tonnes of corn from Brazil for shipment September thru October. This agreement and these purchases could result in China canceling US purchases that are currently on the books. I don’t feel this will happen, but it will most likely limit additional new sales.
A statement by Russian Deputy Foreign Minister Rudenko stated that Russia is in touch with the UN on a potential food export corridor in Ukraine. The reopening of ports would need to include dropping western economic sanctions but could lead to exports in the coming months. The question is how much could be exported, will the damaged ports in Ukraine be operable anytime soon and lastly who will enter the ports to load grain if the war is still taking place?
The selling this week is most likely the markets selling off the longs that they have maintained for so long in the ag markets. With good planting progress, favorable weather and potential limited exports moving forward the markets are taking a breather.
The selloff in the ag commodities this week is a reminder that the sky is not the limit and for anyone to think these markets are stable or heading higher needs to be cautious. Two weeks ago the talk was $9 corn, last week it was $8 corn, will it be $7 next week??? I am not saying we don’t have a chance to see $8 corn again, but I am not going to guarantee it. Get new crop sales on the books at current levels if you don’t have any made because they are profitable levels. Old crop sales should continue to be made as well on any small bounce in the market.
Have a Safe Day!