Afternoon report: Saturday’s bombings sparked a rally across multiple markets that carried throughout the session
Note: Guest commentary provided by Cat Sullivan, ag risk management advisor for Advance Trading, Inc.
Stocks have had a hard time staying positive today with the market expecting a 3/4 rate hike on Wednesday. DOW, -25; S&P, -10; NAS, -121.
Corn
The drier weather outlook as we head into August as well as the Russian shelling Odessa port area sparked today’s rally.
September corn settled at $5.80, up 15 3/4 cents on the day. December Corn settled at 5.83 3/4 , up 19 1/2 cents on the day.
Corn Export Inspections were on the light side at 28.6 mbu. The Trade was expecting 23-47 mbu. The total included 8.2 mbu to China, 4.9 to Japan and 9.3 for Mexico.
Milo Export Inspections came in at 2.9 mbu versus 1.5 mbu needed. Of that total, 2.7 mbu went to China.
Corn ratings are expected to be 1-3 points lower today with this afternoon’s crop condition update. Last week was 64% Good-to-Excellent which matches last year during this same time period. The 5-year average is 65%.
There is considerable chatter surrounding Ukraine’s corn exports in the coming year and particularly, the Sep-Nov period and more specifically as to how this may affect nearby corn spreads. The country will have an estimated 4-5 MMT of old crop corn stocks available for export and some are concerned that this (along with a HUGE Brazil crop coming on) could severely weigh on first quarter U.S. shipments. How the supposed Ukraine/Russia export agreement with shake out is anyone’s guess. Assuming monthly exports will continue at the rate of 1 MMT per month suggests that given fobbing limitations, first quarter shipments will fall about 30% below the average for the period which has been around 4.4 MMT the past 4 years.
Brazil reported a 26 mbu increase in its corn export line-up, 140 million larger than a year ago. It is still uncertain that the market will see any Brazilian corn book by China during calendar 2022 but current C&F quotations indicate Brazil has at least an $8 to $30 per MT advantage through December.
AgRural is projecting an 87 MMT Brazil second corn crop which is 26.6MMT higher than a year ago. They also put harvest progress at 62%.
Mexico’s corn crop is being affected by a drought in the northeast part of the country which may impact yield. China’s weather, however, is improving and easing some concerns over possible corn and oilseed production losses.
The cattle placements number on Friday was somewhat friendly versus expectations. The total came in at 97.6% versus the average estimate of 95.0%.
Soybeans
Continued concern on the August weather outlook gave beans a nice rally today.
August Soybeans settled at $14.73, up 38 1/2 cents on the day. November futures closed up 30 1/4 cents at $13.46.
Soybean ratings are expected to decline 1-2 points this afternoon compared to 61% last week, 60% this time last year, and the 5-yr average of 62%.
The Soybean Export Inspections released this morning continue to be sub-par. Today’s totals are down from 16.1 mbu (revised) last week to 14.3 mbu. The trade estimate range was 4-21 mbu. Someone in that group is really bearish. Only 250 K bushels were sent to China this week. 20 times as much shipped last week. The top destinations were Mexico with 5.2 mbu, Egypt with 2.2 mbu and the EU with 2.1 mbu.
China was reported today to have bought Gulf beans for March loading along with Brazil for August shipment.
Brazil had 205 mbu in its soybean line-up this week. It is 5 more than the previous report and compared to a year ago. The soybean meal total increased 88 K ST or 5% to 1.84 MMT, a not-so-insignificant increase of 462 K versus 2021. With respect to the soybean meal increase, the discount of spot Brazilian FOB meal values to Gulf U.S. high-pro has increased from around $35 per MT two months ago to $74-$75 recently and suggests U.S. crush could be slightly over-stated.
The latest sale of soybean from China’s reserve stocks was less than 1 1/2 % of the 503,800 MT offered.
Wheat
Wheat moved higher as market doubts Putin’s sincerity.
Wheat rallied in all three classes today after the weekend bombings near Odessa’s port. The rally shows a little market uncertainty for the Russia/Ukraine deal, but in the end, the market did not recover as much ground as wheat dropped on Friday. Chicago Wheat settled at $7.70, up 11 cents on the day. September KC Wheat settled at $8.39 3/4 , up 19 1/2 cents on the day while Minneapolis Wheat gained 13 cents settling at $8.84.
Spring wheat ratings are estimated to be 1 point lower this afternoon (Monday) at 70% Good-to-Excellent, versus 9% last year and the 53% 5-year average. Winter wheat is expected to be 79-80% harvested, which is up from 70% last week and compares to 82% from last year and the 80% 5-year average.
Wheat Export Inspections released this morning improved from a revised 7.0 mbu last week to 17.5 mbu. Totals landed near the top of the trade’s estimated range of 7-20 mbu.
The Inspections by Class reported Durum with shipments of 700 K this week after none were reported last week. 2.0 mbu of HRS shipped this week compared to 100 K last week, HRW had shipments of 6.6 mbu compared to 3.6 mbu last week, 5.7 mbu of SRW shipped this week compared to only 400 K last week, and SW shipped 2.5 mbu after shipping 2.9 mbu the week before.
Buyers from China were said to have purchased around 1 MMT of Australian wheat both for animal feed and flour milling this week for shipment periods between September and March. This signals that the Asian country is taking advantage of a recent dip in prices to fill its large needs. Trade rumors also had several vessels of 10.5% protein French wheat purchased for shipment between September and November.
Weather
Northern portions of the Corn Belt are expected to receive less than 1/2 inch through next Monday with 1/2 to 2 1/2 ” from southern Nebraska and Kansas to Ohio and Kentucky. Temperatures are expected to be near to below normal.
The SE U.S. Is forecast to receive 1/10 to 3/4 ” in GA and SC with 1/2 to 2″ in all other areas.
The Delta is forecast to receive 1/2 to 2 1/2 “.
Warming to above normal from the western Corn Belt through the Great Lakes region to the northeastern states where readings should be three to eight degrees above normal next week. Hot weather is predicted in the northwestern United States this week and into early next week with several areas getting to the range of 10 to 20 degrees above normal with extremes to 110 Wednesday.
U.S. Hard Red Winter Wheat Belt is forecast to receive 1/10 to 1 1/2 ” rain through Sunday favoring areas from Colorado to western Kansas and northwestern Oklahoma where local totals are expected to reach up near to above three inches. Temperatures should be near to below normal in the north and above normal in the south.
Europe is predicted to receive 1/10 to 1/2 ” from northern and central France to northern Poland; 1/2 to 2″ inches from the U.K. to Scandinavia, 3/4 to 2 1/2 ” from northern Italy to southern Poland, Belarus, western and northern Ukraine and northern Romania with a trace to 1/2 ” in Spain, Portugal, southern France and down the Italian Peninsula. Temperatures should be above normal.
Contact Advance Trading at (800) 747-9021 or go to www.advance-trading.com.
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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 Settlements Quotes as of 2:03 p.m.
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