• HEADLINES: US employment accelerates calming demand fears; Black Sea grain corridor deal elusive; Falling Argentine crop sizes cause world soy product shortages.

• US job growth accelerates in April as the unemployment rate falls to 3.4%; Chance of US recession dims with a chance of soft landing; Commodity markets rally sharply on “recession off” thinking; US HRW wheat futures rise on low US HRW wheat crop estimates and fear of the Ukraine corridor closing as today’s Moscow meeting has ended without resolution.

• Midday Chicago futures are sharply higher with soyoil/wheat leading the advance with corn/soybeans following in active trade. The DOW jumped 400 points with regional bank stocks the day’s biggest percentage gainers. And US Treasury yields are up 0.10% in the 10 year note as the US Central Bank will likely hold rates higher for longer. A cut in rates is not expected in 2023 amid the rise in US employment. Job and wage growth keeps demand elevated with the gloomy economic forecasts of recent weeks overdone.

• Commodity markets have been trading a mixture of fundamentals, fund flows and gloomy economic forecasts with several economists calling for outright deflation. The US economic outlook has slowed, but if regional bank contagion does not get out of hand, commodity values look like they are too cheap.

• Chicago brokers estimate that funds have bought 5,600 contracts of wheat, 6,800 contracts of corn, and 5,500 contracts of soybeans. In soy products, funds have bought 8,500 contracts of soyoil and 1,800 contracts of soymeal. It has been a bulldozer trade in one direction with funds really coming to cover short soyoil positions early in the day.

• Russia, the UN, and Turkey have ended talks and they failed to reach an agreement authorising new vessels into the Black Sea. All parties will allow ships to exit, but the de facto ban on new vessels offers a gloomy assessment for the continuation of the corridor beyond May 18. We hear that Russia argues that its finance demands are not being met. Unknown is whether Ukraine shipping channels will be mined to prevent Russia from a seaborn attack. Time is running out for an extension of the Black Sea Grain Corridor Deal.

• The Markit Survey of US winter wheat estimated the US HRW wheat crop at 588 million bu with US SRW wheat at 387 million. A year ago, the US HRW wheat crop was 531 million bu with the US SRW crop at 337 million bu. Traders fear that the final US HRW wheat crop will fall under last year due to additional abandoned acres. NASS has been surveying US winter wheat fields all week, with the Crop Quality Tour occurring in the third week of May.

• It is shocking that Argentine soybean/corn production totals keep falling to the degree that harvested yields suggest. An 18.5 million mt soybean and 30 million mt corn crop are down 8.5 million and 7 million, respectively from USDA’s April forecast. It is at a point where Argentina logistically cannot import enough Brazilian soybeans to fill world product demand. This should cause a sharp rally back in soy crush margins/soy product prices. And Argentine corn exports will not be made up by the larger Brazilian harvest. Note that Brazilian soybean (and soy product) premiums keep rising with September offers at $0.70 over Chicago.

• The GFS weather forecast is drier across the W Plains/NW Midwest and further east with rain across the Delta with heavy rain totals 6-8.00” projected along the western side of the Mississippi River. Such rain would add to the heavy river flow that is underway. Also note that unwanted rain drops across the Northern Plains where farmers are struggling to seed spring crops. If the active pattern persists, seeding will be pushed into the last half of May. Please note that the GFS forecast has been dynamic on a new split jet stream flow.

• Traders are considering whether early seasonal lows were scored amid the early week economic gloom surrounding regional US banks. And new pessimism regarding the Black Sea Grain Export Corridor has added to the upside volatility. We have previously warned that Chicago volatility will stay high amid the lack of resting orders. World grain trade has held up better than the bears expected and adverse weather for a major exporting nation this summer could create a lasting bullish trend.

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