Highlights
The war for Ukraine is not going to end after Russia completes its quest to gain complete control of the Eastern Ukraine disputed Donbas-Luhansk area. NATO said the war will continue for two more years at the least. NATO will most certainly do their best to make sure the war does just that.
Russia’s military movements clearly show Ukraine’s second largest city, Kharkiv, in the extreme northeast part of the country, just 35 miles from the Russian border, is the next military objective as Russian forces are moving artillery equipment in position to shell the city again.
The US grain market does not give Japan the respect it deserves. Before China and Mexico became major buyers of US grains and soybeans, for decades, Japan was the number one importer of US farm produce. Their purchases got very little attention because Japan bought about 100,000 to 150,000 mt of various farm products every Thursday and they still do. They issue their shopping list early in the week for all prospective suppliers to submit their offer. On Thursday, Japan announces which offers they will accept and the process is repeated every week.
Because the Japanese business is routine, there is no publicity, whereas a country which does not do regularly scheduled business, their purchases make for highly reported business news.
And so, it is noteworthy the Japanese yen remained under pressure today, weakening near a 24 year low after the Bank of Japan on Friday reversed its policy of tightening the money supply (higher interest rates and larger bank reserve requirements to control inflation) back to an ultra-easy money policy (print more money, low interest rates, lower bank reserves requirements). The bank of Japan decided inflation is better than risking a recession. All they are doing is pouring gasoline on the inflation fire and it will take a more serious risk of recession in the future to bring inflation under control.
The weaker the yen goes, the more expensive US products become for Japanese buyers. This morning, it takes 134 yen to buy a US dollar. One month ago, it took 127 yen; 17 months ago, it took 102 yen to buy a dollar. That is a 31% loss of buying power for Japanese importers of US products in 17 months. That makes $15 beans cost $19.65 now. That extra $4.65 does not do you US soybean producers one cent of good. In fact, since high prices discourage demand, the weak yen and strong dollar reduces Japan’s demand for all US products.
But for the next five weeks, none of the above matters as far as pricing corn and beans. The three 6 to 10 day weather forecasts and the three 8 to 14 day forecasts issued since the market closed Friday all predict enough crop stress that corn and bean prices should be moving higher this coming week. At the worst, corn and bean prices will not go down and stay down until the weather forecast changes.
Wait to sell more corn, beans or call options and wait to price corn and bean and buy puts.
Market Data
This morning:
Crude oil is at $110.14, up $0.58
The dollar index is at 104.28, down 0.42
July palm oil is at 5,340 MYR, down 339. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.
December cotton settled at $118.29, down $0.94 per cwt(not trading today). The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.
July natural gas is at $6.723, down 0.221. The contract high was made June, 8th at $9.664. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD is at $4.3653 per gallon, up 0.0255. The contract high was made June, 17th at $4.6444. ULSD stands for Ultra Low Sulfur Diesel.
Rain Days Update
The Western Corn Belt has 5 more rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 5 more rain daysthan yesterday.
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days