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Turner's Take Ag Markets | All Eyes on the Black Sea

By: Craig Turner, Senior Risk Management Consultant

Turner's Take Ag Markets
 
Craig Turner
Senior Risk Management Consultant
Turner's Take Podcast

MACRO MARKETS | Stocks are slightly lower after Federal Reserve Chair Jerome Powell reiterated central banks will do with it takes to fight inflation.  He thinks a pause in rake hikes or a pivot to easing will not come any time soon.  Overnight the ECB hiked interest rates by 75 basis points.  Their overnight lending rate had been 0% and now it is 0.75%.  The Fed is expected to raise interest rates another 75 basis points at their Sept FOMC meeting.  It is looking very likely the Federal Reserve overnight rate could be 4% by the end of the year.

 

GRAINS | Wheat is the leader today due to market anxiety over Putin's comments yesterday.  Turkey's President Erdogan has come out in support of Russia.  Erdogan said if Ukraine can export grain to wealthy EU nations instead of poorer developing countries, Russia should be able to export more grain and oilseeds out of the Black Sea too. Russia is going to have a huge wheat crop and they don't have enough storage.  They need the Black Sea export corridor too and will likely argue if Ukraine is not exporting grain and oilseeds to developing nations, then Russia should be able to do so.  

Canada yesterday reported all wheat stocks at the end of July at 3.67 million tonnes, down form 5.95 MMT last year, and 5.5 MMT in July, 2020. Stocks are tight but the new harvest will go a long way to replenishing supplies.  Corn is also supporting grains with traders expecting production cuts and lower ending stocks for Monday's USDA report. Stats Corn should remain in range until the WASDE on Monday.  

 

OILSEEDS |  Stats Canada reported stocks at 875,000 MT, slightly above expectations.  Stats Canada increased 2021 production 1.163 MMT higher, kept ending stocks within expectations, and did not have any surprises in crush or exports.  It begs the questions where did this extra canola come from and did it find it's way into the market?  Was there less canola in storage than previously estimated to balance out the higher 2021 production?  Regardless, the number was slightly bearish for canola in an already bearish seasonal window due to harvest.  

The USDA will release their Sept WASDE on Monday at 11am CT.  The trade is estimating a 51.5 bpa for soybeans and new crop ending stocks approximately 250 mm bushels.  Analysts are looking for deeper cuts for corn so the trade has been positioning long corn vs short soybeans.  

 

 Craig Turner
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