Perspective: Morning Commentary for June 6

By: Arlan Suderman, Chief Commodities Economist

Mon, 06 Jun 2022, 13:25

Perspective: Morning Commentary

Arlan Suderman

Chief Commodities Economist

June 6 – Stock futures rallied overnight despite rapidly escalating tensions with Russia revolving around the Ukraine war. However, that escalation lit a fire under the grain and oilseed complex, as it brought a little reality to those holding onto hope that we might see corridors open any time soon for grain and oilseeds to move out of Ukrainian ports. Crude oil prices also pushed to fresh highs last seen in early March, but they’ve struggled to sustain that strength into today’s session. The VIX is relatively stable near 25 this morning, while the dollar index is again trading near 102.1. Crude oil prices are currently firm, while the Ags post strong gains, although off their session highs that were posted overnight.

The propaganda war escalated last week as Russia painted itself as the “good guy” in the war with Ukraine, offering to help Ukraine export grain from its southern ports to help to feed the world. However, that “good guy” image was tainted again as the world was able to see President Putin again as a ruthless attacker after he hit Kyiv with a series of cruise missiles, while also striking a port facility at Mykolaiv. The strike at Mykolaiv reportedly resulted in two port storage facilities burning down, resulting in spectacular explosions and a fire, which allegedly destroyed sunflower meal contained within the facility. The strike undermined the credibility of Russia’s claims that it had no intention of blocking the flow of food-based commodities out of Ukraine’s ports, and that it would even facilitate such. Russia stated that the strikes on Kyiv were targeted at western military equipment moving east toward the battlefield. The combined attacks quickly eroded any confidence of an agreement to develop humanitarian corridors, sending grain and oilseed prices sharply higher overnight – especially for wheat.

Nonetheless, the talks continue. Sources close to the talks say that a roadmap has been developed for exporting Ukrainian grain from port facilities at Odessa, which is the largest of the grain exporting facilities in Ukraine. Russia’s been seeking to take control of Odessa throughout the war, but it has been unable to get close to Odessa to this point. Thus far, it’s hits on Odessa have largely been airstrikes. The roadmap reportedly would have the Turkey military remove the mines that currently protect the waters off of Odessa. It would then escort ships containing grain from Odessa to certain coordinates away from the port, where they would garner an escort from Russian ships to the Bosphorus Straits where they could exit the Black Sea. The unnamed source stated that the roadmap has been agreed to by both Turkey and Ukraine, and it may be signed as early as Wednesday or Thursday of this week. That said, there are also reports that cast doubts on whether Ukraine even participated in discussing the roadmap. The above report took the edge off the overnight rally in grain prices, suggesting that an agreement may still be alive, but skepticism is a bit more of a feature to this point than it was last week. I remain one of the skeptics that must be convinced that Russia will allow Ukraine to export notable volumes of grain through its ports.

Today’s China Direct, published by our Shanghai office, notes that Covid numbers are in decline in China, allowing authorities to slowly reopen many areas of Shanghai, Beijing, and elsewhere that had been in lockdown. Frequent testing and restrictions are now a way of life in China, and that will likely be the case for many months to come. Energy consumption is on the rise in China once again as it struggles to jumpstart its economy once again. Many residents stayed home during last week’s three-day Dragon Boat Festival, fearing that they might receive notice on their phone a day or two later that they had come in contact with someone else who tested positive while out and about, and that they therefore need to quarantine. National tourism revenue was just 65.6% of levels seen in 2019 before Covid. Cinemas remained closed through the holiday in Beijing and Shanghai, but 80% of remaining cinemas opened for the holiday. Yet, box office receipts were just $26.7 million – second lowest of the past decade. China’s service sector contracted for the third consecutive month in May, due to the Covid restrictions and lockdown.

USDA will release its weekly crop progress numbers this afternoon, shedding more light on unplanted acres in the Dakotas and Minnesota, although those numbers tend to move closer to 100% as farmer intentions change, even if little activity occurred during the week. I do not expect USDA to make any significant acreage or yield adjustments in Friday’s monthly WASDE crop report. In fact, I expect USDA’s June 30 acreage report to include a note stating that they will be resurveying North Dakota and Minnesota, and possibly another state or two to better determine the scope of acres that went unplanted or that saw crop mixes change. As for this week, I look for headlines regarding the possibility of Ukraine exports to continue to swing market sentiment. The European monthly model update came out on Sunday, showing a warm dry bias for July, August, and September. The bias reflected in the maps was not enough in my opinion to feed the bulls, although they did confirm expectations that La Nina will continue through the summer, and that gives reason to be concerned for Midwest crop yields. I think it keeps traders monitoring the weather for potential risks in a tight supply year, but traders still lack any hard evidence that this summer’s Midwest weather will be problematic.

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Perspective: Morning Commentary for August 5

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Matt ZellerWed, 05 Aug 2026, 12:39

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Matt ZellerTue, 04 Aug 2026, 12:43

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Mike CastleMon, 03 Aug 2026, 15:10

Grains & Oilseeds

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