Weekly Market Update 5-4-23

May 04, 2023
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Here is your weekly market update from the Garden City Co-op Grain Origination Team.

Trivia

  1. What victory does Cinco de Mayo recognize?

  2. The Kentucky Derby is this weekend - what is the standard distance of this horse race?

Answers at the bottom.

Market News​

Drones attempt to strike the Kremlin. Moscow says its defenses shot down two drones attempting a strike early Wednesday morning on the Kremlin residence of Russian President Vladimir Putin. Russian officials are blaming the U.S. and Ukraine for what they are claiming was an assassination attempt on Putin and said retaliation options are being weighed. Both Ukraine and the U.S. are denying involvement. Three Russian drones that struck the Ukrainian city of Odesa early Thursday appeared to be sent in retaliation. This all comes ahead of a planned meeting between Turkey, Russia, Ukraine and the United Nations on Friday to discuss an extension of the Black Sea Grain Deal. The deal is set to expire on May 18th.

Rates are increased yet again. Yesterday the Federal Reserve raised interest rates for the 10th time in a little over a year. Rates are now at their highest level since August 2007, with the benchmark interest rate at a range of 5.00%-5.25%. The 25-basis point rate hike was generally expected and fully priced into markets. Rates have increased 500 basis points within 15 months.  Despite a previous statement that "additional hikes might be needed", The Fed has now said in a statement that it will weigh a range of factors in determining the extent to which future hikes might be needed. Along with inflation, the Fed has also had to deal with the fall-out in the banking industry that has seen three mid-sized banks close their doors.

Export Inspections: We saw some solid numbers for export inspections on Monday, but this wasn’t enough to shift the momentum for grains. Corn saw 59.8 million bushels of corn shipped, above trades estimates. Japan led the way followed by Mexico and China. Wheat was the other grain to perform well with 13.2 million bushels shipped. HRW was the top variety at 5.8 million bushels. Mexico and Japan were again the top destinations. Soybeans were middle of the pack for estimates at 14.8 million bushels. China was the leader in the clubhouse for soybeans. Milo had its best week of inspections in over a month with 4.3 million bushels shipped with China the main destination. Export Sales: Corn was ugly and somewhat to be expected with the cancellations from China the previous week. Corn was a net -12.4 million bushels which is not going to get any rally jump started. Soybeans sold 10.6 million bushels of old crop with 2.5 million bushels of new crop. China and Germany were the top buyers. Overall soybeans have fallen below the USDA’s target and needs to pickup the pace. Wheat saw 7.8 million bushels sold with SRW the top variety with 2.5 million bushels. Milo is having a repeat of last week with no sales this week.

Crop Progress Report: Corn plantings came in 1% below expectations, with USDA reporting Monday that the crop is 26% planted - right in line with the 5-year average. Soybean plantings were reported at 19% complete, versus 17% expected. Northern states, espectially the Dakotas, Minnesora, and Michigan, remain below their typical pace as they continue to dry out. Looking ahead, weather forecasts look to be a touch drier across the Corn Belt and should make for a good planting window with minimal delays. Winter wheat conditions improved by 2% to 28% good-to-excellent. PNW states, Colorado and Oklahoma improved, while Kansas, Nebraska and South Dakota declined. The Kansas wheat crop is now reported at only 13% good-to-excellent. Spring wheat plantings are running well behind, reported at only 12% planted against a 22% 5-year average.

Drought monitor sees some relief for southwest Kansas. Last week's rain resulted in a category change for southwest Kansas, with the area south of the Arkansas River moved from D4 drought to D3 drought. Now we can only hope we keep getting moisture! An updated drought monitor map is included below.
 

conus text
Weather

The weather this week looks amazing! Highs will be in the 80s with lows in the high 40s. The temperature outlook is leaning above normal, and the precipitation outlook is leaning above normal as well. It’s looking a little breezy throughout the coming week with windspeeds 5-20 mph – pretty normal for the southwest. Looking ahead towards the end of next week there are promising chances for moisture starting on Wednesday and through Friday, with chances as high as 50% starting mid-week and 30% later in the week.

temp precip

Trivia Answers

  1. Cinco de Mayo is a holiday recognizing when the Mexican army claimed victory over France at the Battle of Puebla during the Franco-Mexican War on May 5, 1862.

  2. 1 1/4 mile