Afternoon report: Markets traded both sides today finding early gains that faded as the day progressed despite weather concerns across the U.S.
Note: Guest commentary provided by Cat Sullivan, ag risk management advisor for Advance Trading, Inc.
Highlights
CPI shows consumers are paying 9.1% MORE than they were a year ago, so it is getting worse (8.8% expected), causing Wall Street to brace for more rate hikes.
Weather
Corn Belt rain amounts through Tuesday are forecast from 1/2 to 2″ in 65% of the region with some amounts of 2 1/2 to 3″ possible in some areas. Temperatures are forecast to be near to slightly below normal.
The SE U.S. is predicted to receive 3/4 to 2 1/2 ” during the period with a few amounts between 3 and 5″. Temperatures are forecast to be near to below normal.
Delta rain amounts will range between 3/4 ” to 2 1/2 ” in 55% of the region with a few amounts of 3-5″ – especially in southeastern areas. Temperatures are forecast to be near to below normal.
Moisture expected for the U.S. HRW area is between 1/10 to 3/4 ” over 60% of the region with temperatures forecast to be above normal most often.
Corn
Corn was back to trading warm temps and dryness today all the while retaking some ground after yesterday’s slump. September Corn settled at $6.00 up 6 cents on the day. The Weekly EIA Ethanol Report released this morning revealed a production fall of 39 K to 1.005 mbpd. This was 39 K below the trade average and well below the low end of the 1.035-1.051 trade range. Inventories edged up 116 K to 23.6 mb which was in line with the 23.618 trade estimate (range: 23.04-24.21).
Brazil exported 953 K of corn the 1st 6 days of July for a 410 K/75% increase versus July 2021. Argentina increased its 21-22 corn export quota by 6 to 36 MMT. Export registrations at the end of June were 27.6 with the USDA forecasting a 39 MMT total or about 2 less than in the preceding year.
In recent Ukraine-Russia talks, diplomats are saying the effort focuses on Ukrainian vessels escorting grain ships in and out of port if Russia would agree to a truce while shipments are made. Comments include “two steps away from a deal being made” and “talks are in the final stage . . . everything depends on Russia”.
CONAB indicated Brazil’s Safrinha crop is 40% harvested as of July 9th. IMEA reports Mato Grosso have so far sold only 11% of this year’s expected crop, well off last year’s 26% pace and below the 21% 5-year pace. European Union corn producers Serbia, Hungary and Romania have all scaled back their corn production estimates due to the severe drought across much of Europe this summer. Ukraine shipped 1 MMT of corn in June, against 959 K in May but well below the 1.7 MMT exported in June 2021. Russia’s shipments dropped about 50% from May to 254 K. South Korea feed compounder MFG was said to have booked a 68 K cargo of either South African or South American corn for November 14th arrival at $334 CFR.
Soybeans
Weather worries and supply concerns lifted soybeans today from yesterday’s break in futures, while soybean oil was weaker. August Soybeans closed at 14.84 3/4 , up 16 1/2 cents on the day.
China’s June soybean imports dropped from 9.7 in May to 8.25 MMT, a 23% decline versus June 2022. Brazil’s soybean exports the 1st week of July were 2.6 MMT, 10% ahead of the July 2021 pace.
Soybean meal exports are leaving the country at a faster pace, up nearly 33% at 720 K (542 K LY) and one of the reasons for the USDA’s cut in expected U.S. meal exports. Covid, high prices and slowing economic growth led the USDA to lower its PRC SBO import estimate from 950 K down to 350 K in the July WASDE.
As with corn, soybean producers in Mato Grosso have been somewhat slow to forward book with sales at 25% of the crop, 9+ points behind 21-22 and slightly less than the 5-year average of 25%. The MPOB reported June end-of-month stocks of 1.66 MMT, a near-9% increase from May as the seasonal rise in production was a little less than anticipated.
Production for the month of 1.545 MMT, fell slightly short of MPOA’s 1.56 estimate. Output in subsequent months should trend higher as the crop reaches its peak production cycle, provided there are few labor issues.
Wheat
Gains in corn and dryness in some parts of Europe led to an early rally in wheat futures today. Quality worries in the Baltic region also played a part in the gains.
In the end, September Chicago Wheat closed at 8.10 3/4 , down 3 1/2 cents on the day.
The Russian wheat harvest has been completed on 9% of the expected area with the collected reaching 11.6 MMT as of July 11. Recent rains in some Baltic countries are fostering concerns over wheat quality.
France’s Ag Ministry now sees the soft wheat crop at 32.9 MMT, a 7+% decline from last year due to a 5.6% drop in area and yields of 6.9 MT/HA which down about 3% as well. However, 22-23 soft wheat exports are forecast to reach a 3-year high of 10.3 MMT, up from 8.8 in 21-22.
Contact Advance Trading at (800) 747-9021 or go to www.advance-trading.com.
Information provided may include opinions of the author and is subject to the following disclosures:
The risk of trading futures and options can be substantial. All information, publications, and material used and distributed by Advance Trading Inc. shall be construed as a solicitation. ATI does not maintain an independent research department as defined in CFTC Regulation 1.71. Information obtained from third-party sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.
The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
CBOT Quotes as of 1:59 p.m.
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