Marketing and market.
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Marketing and market. (Via Field/)

Finally, some scenario seems to have been found in the Black Sea: the extension of the maritime corridor for 120 days generates some certainty despite the hail of missiles that Russia launches on Ukraine. Even without an end date for the territorial invasion, this deal would include Russia’s request for an end to sanctions on its main banks, and Ukraine’s request for more shipping ports. Ukraine would have about 15 MTn of corn to ship, since what is leaving its ports today is from the past harvest.

The improvement of the global climate is the most wanted card. Supply still needs to consolidate a recovery. Many key producers, including Argentina here, have to overcome this first barrier to stay in the game. With good progress in planting 22/23 in Brazil, the dry spot in the Central West is the main area to watch. Although the weather would be more favorable these days, critical conditions persist in various portions of Argentina’s producing region, and more millimeters are needed to get out of that place.

Changing hemispheres, the cold is entering the eastern United States and the rains would be below normal, delaying the regularization of the Mississippi River. Exports continue to be delayed from the Gulf area and its best commercial window is coming to an end. The exception is wheat, with Russia having the potential to stalk the market with its supply. Returning to the US, the natural put provided by its domestic consumption remains intact to meet its projected data in 2022/23.

Global economic data does not give up space in the tabloids either. The weakness of the dollar in recent weeks may mark a new stabilization level that is less aggressive than the previous one. For its part, OPEC is reducing production in response to the slowdown in global macros and oil demand. The story of China’s reopening from Covid never hits the headlines. However, for grains, there are some keys to follow: The imminent entry of between 6 and 8 Brazilian ships of corn is the kickoff for the entry of more loads in the coming months. With the shipments agreed for December and January, and the soybean market, he would be anticipating a regularization of the purchases of the oilseed and its stocks.

China tries to reduce dependence on imported cereals to make food production cheaper as a state policy and despite business interests. The use of soybean meal would try to minimize and increase the other alternatives and its own production.

imported cereals

Imported cereals (Via campo/)

Regarding global prices, corn and wheat are in the lowest ranges of the year. If managed money maintains their positions, corn could continue to strongly defend its values ​​in the medium term. In opposition, with a mega Brazilian soybean harvest in the excels, and a wheat where the worst stories of the cycle have already happened, they have less medium-term travel, except for those who question the Brazilian supply of the oilseed and Russia as an exporter.

The local market describes its own paradigm, which combines an adverse production scenario and distorting and uncertain domestic marketing conditions, which obscure the reading of prices, leaving some opportunities that the markets show ahead. In the case of corn, the increase from Dec22 to May23 is the lowest since 2012 at this point, which indicates that it should have a correction (up in May and/or down in December). Same when we look at Chicago 2023 passes, with a future July trading below May.

The local price of this cereal trades with FOB premiums in all its positions, in a 2022/23 scenario, higher than the values ​​at this time of the year in previous cycles. Corn also has a high purchasing power, that is, a very positive relationship against other assets such as soybeans and meat.

2023 could surprise us again with new paradigm changes, which configure other price levels. Futures markets are taking a set of variables, and actively anticipating implicitly has a strategic view of the market. In opposition, the agents that act based on what has happened in the past lose that possibility. What happened doesn’t always happen again and being able to read that situation adds some dose of rationality. “Vision without action is just a dream; action without vision is a pastime; vision and action together can change the world” says Joel Barker in one of his “Paradigms” videos. Looking for opportunities, and challenging paradigms, is behind the generation of change, and leaves whoever dares in a more flexible position in the long term.

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