Afternoon report: Weather forecasts call for improving conditions into the weekend affecting corn and soybean prices to the downside.
Note: Guest commentary provided by Cat Sullivan, ag risk management advisor for Advance Trading, Inc.
Weather
Corn Belt temperatures through next Tuesday will be near to above normal with rainfall amounts of 1/10 to 3/4 ” with isolated amounts of 1-2″; the central and northeastern areas likely being the wettest.
The Southeast U.S. could see 1/2 to 2″ with a few amounts of three inches as temperatures average above normal.
Delta rainfall with range from 1/4 to 1 1/2 ” over 35% of the region with the heaviest amounts in central and southern Mississippi; temperatures should be near to above normal.
The HRW Belt is forecast to get 1/10 to 3/4 ” during the period with more than 1″ possible in the North as temperatures average above normal.
Rainfall in Europe during the next week will be 1/10 to 1″ over 35% of the region. Temperatures are expected to be above to well above normal. Canadian Prairie rainfall is expected between 1/10 to 3/4 ” with pockets of 1″ or more. Temperatures are expected to be near to below normal.
Corn
Corn traded slightly lower today on the improvement in the forecast for next week. September corn settled at $5.92 1/4 , down 4 1/2 cents on the day. December Corn settled at 5.90, down 5 1/4 cents on the day.
The Weekly EIA Ethanol Report was released this morning. Ethanol production rebounded 29 K bpd to come in at 1.034 mbpd, topping the average trade estimate by 20 K and, exceeding the upper end of the 996-1.030 mb range. Ethanol Stocks slipped 53 K to 21.55 mb, or 46 K above the trade’s 23.507 average.
While U.S. corn export shipments are holding up fairly well at 43 mbu per week (seasonal average is 46 and we did 51 last year); sales aren’t so good. Combined old/new crop sales at 17 mbu per week are about one-third of the 5-year seasonal average.
Brazil’s corn export line-up was 20 million week-to-week on Monday at 236 million, an increase of 105 mbu or 125% compared to the numbers from a year ago.
Is feed demand faltering? A Bloomberg survey has June placements falling to 1.57 million, almost the largest decline in nearly 12 months.
Yara International has noted production curtailments due to rising natural gas prices could lead to a global shortfall of nitrogen-based fertilizers in the coming year. The company is curtailing annual production to 1.3 MMT of ammonia and 1.7 of finished fertilizer. Quarterly sales to Europe are down 22%; to the Americas, 22% as well and 18% lower in Asia.
Soybeans
Soybeans lost double digits today from the forecast improvement. August Soybeans settled at $14.49, down 28 1/4 cents on the day. November futures closed down 26 cents at $13.32 1/4 . Both months settled with the lowest close since July 6.
Export bean demand? Perhaps an aberration but old and new crop sales over the past month are averaging a mere 1.2 mbu per week. The 5-year seasonal average is 26 and last year the pace was just over 22. The latest numbers are a 19-year low. But that being said, the USDA announced a Daily Sale today of 136 MT 2022-23 Soybeans sold to China…
ANEC expects Brazil’s July SB exports to reach 7.9 MMT, below the 8.7 MMT shipped in July of 2021. Shipments the first 11 days of the month are however, running 16% ahead of LY at 5.0 MMT. Rather than declining seasonally, Brazil’s soybean export line-up increased 10 to 200 mbu, 7 fewer than a year ago. SBM fell 97 K to 1.75 MMT but is 30%/400 K larger than a year ago. Argentina’s June crush was a couple 100 Ks below expectations, coming in at 3.9 MMT and down a similar number vs 2021.
China is said to be fully covered on its July needs with August at 80-88%, depending on your source. South Korea bought 60 K MT of South American soybean meal at $538 CNF for late Sep-early Oct loading. Gulf Soybean meal has become increasingly uncompetitive versus South America in recent weeks. The Gulf’s premium to Brazil and Argentine meal has risen from $25-$30 compared to Brazil and $35-$40 versus Argentina in early June to over $70 per MT in both cases of late.
Canada is said to have inked a deal to import new crop rapeseed supplies from Ukraine with shipments to be executed in August.
India’s June meal exports soared nearly 70% to 432 K metric tons from 255 in May and the total was more than twice as large as June of 2021. Rapeseed meal rose from 169 K LM to 309 K; Soybean meal improved from 19 K to 32 K.
Palm Oil guru Dorab Mistry expects futures to fall about 20% to 3,000 ringgit by September on surging Indonesian shipments.
Wheat
Volatile trading occurred in wheat today with all 3 classes settling 30 cents off their highs. Rain and cooler temperatures are in the forecast for Russia. September Chicago Wheat squeaked in at $8.14 1/4 , up 2 cents from yesterday. September KC Wheat settled at $8.65, down .04 1/4 on the day while Minneapolis Wheat dropped .08 settling at $9.21 3/4 on the day.
Egypt passed on its tender but will be back today for another attempt. Sources say they are considering moving to negotiating differently than the normal announced tender processes.
Russia announced plans to begin buying up to 1 MMT of wheat of its state reserves in August. Wheat harvest has already reached 22 MMT. Yields to date at 4.32 MT/HA are up 25% versus last year.
Pakistan seeks 200 K of milling wheat for September shipment.
Thanks to some very solid export sales last week, the latest 4-week average of 21 per week is at a 9-year high and 50% above the seasonal average. Would expect near-term exports to run close to 18-20 per week.
Contact Advance Trading at (800) 747-9021 or go to www.advance-trading.com.
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The opinions of the author are not necessarily those of Farm Futures or Farm Progress.
CBOT Settlements Quotes as of 2:04 p.m.
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