Afternoon report: Extreme heat in the forecast has markets concerned over potential yield changes. Black Sea trade still undetermined.
Note: Guest commentary provided by Cat Sullivan, ag risk management advisor for Advance Trading, Inc.
Stocks are edging lower on mixed earnings and ahead of tomorrow’s Fed rate announcement. We haven’t seen this in some time, but French corn futures were up 49 cents at one point. Wheat was 34 cents higher. Are they looking at severe crop issues? DOW, -281; S&P, -55; NAS, -274.
Corn
Intense heat on tap for the western Corn Belt. September corn settled at $5.97, up 17 cents on the day. Today’s rally brought the December corn settlement above $6.00! Every quarter of a cent counts, settling at 6.00 3/4 , also up 17 cents on the day.
Corn ratings fell 3 points yesterday to 61% Good-to-Excellent. This was 2 points more than the trade expected and now 3 points below 2021, as well as 4 less than the 5-year average. 62% of the crop has reached the silking stage, trailing last year by 14 and 8 points off the average. 13% is in the dough stage, which is down 4 versus last year and 2 behind the average. Milo ratings plunge 5 points to 30%. This is 36 points below this time a year ago.
The July report published by Monitoring Agriculture Resources showed that hot temperatures in the EU continued to have an adverse impact across the region’s key growing regions. 2022 yield forecasts for corn, sunflowers, and soybeans are expected to reduce by 8 to 9%, below the 5-year average.
Brazil shipped approximately 950 K MT of corn the third week of July, 60% more than the 597 K shipped in the same period in 2021. AgRural has raised the second crop corn estimate 800 K to 87.3 MMT; Conab’s last figure was 88.4 MMT. IMEA reported Mato Grosso’s safrinha harvest reached 94% on Friday, up 9 points for the week and running 12 ahead of LY and 21 ahead of the 5-year average. Brazil and China are back discussing export protocol with the Brazil Ag Min indicating corn could be shipped to China beginning in the second half of 2022.
Ukraine’s Ag Minister said yesterday that grain exports “may” reach 3.5 MMT per month in the near future, beginning with 1.5 million in August.
Under the most favorable of circumstances, trade sources are warning not to expect an early return to the use of handysize and panamax vessels for export. Most of the vessels used for grain exports for the time being will be the 10,000 MT coaster size vessels, rather than the 40-70 K MT ones.
Soybeans
Yield concerns mount with as early August forecast remains hot to very hot. August Soybeans settled at $15.32 3/4 , up 59 3/4 cents on the day. November futures closed up 37 3/4 cents at $13.83 3/4 .
Soybean Good-to-Excellent ratings dropped 2 points to 59%. This was 1 point less than the trade but 1 point higher than last year and 6 points above the 5-year average. 64% of the crop is in the blooming stage, which is 10 points behind last year and 5 behind the average. Pod setting reached 26%, which is lower than both last year at 39% and the 5-year average at 34%.
Argentina’s government is looking at creating a separate peso-U.S. dollar exchange rate for the country’s agricultural sector in a bid to incentivize farmer sales. Local media reported that sales are lagging behind last year’s levels. A total of 20.4 million mt of the newly harvested soybean crop have been sold as of July 13, which is around 48% of the production for the season, and it is nearly five percentage points behind the farmer sales done at same time last year.
Brazil’s soybean exports the 3rd week of July plunged nearly 1 MMT from a week earlier to 1.2 MMT from a week earlier and the total was 300 K less than in the year ago week. Soybean meal shipments jumped 262 K/85% to 572 and topped the 429 K exported in the same week in 2021.
Wheat
Wheat rallied again today following corn and beans as they sweat out the heat. Continued uncertainty in Ukraine has also brought some life to the wheat market. Chicago Wheat settled at $8.03 3/4 , up 33 3/4 cents on the day. September KC Wheat settled at $8.77, up 37 1/4 cents on the day with Minneapolis Wheat gaining 44 3/4 cents settling at $9.28 3/4 .
Reports came out today that another port in Ukraine was attacked by Russian forces in Mykolaiv. This is now the second port to be attacked since a trade agreement was made late last week.
U.S. Spring wheat Good-to-Excellent conditions fell 3 points to 68%. This compared to just 9% last year and 63% for the 5-year average. 77% of the winter wheat crop has been harvested. This is 5 points behind last year and 3 below the average.
The World Food Program has issued a tender for around 30,000 mt of Ukrainian milling wheat for delivery in August, trade sources said Monday. Based on the activity this week, this will most likely not be delivered via Ukraine’s ports.
Weather
The U.S. Corn Belt is predicted to receive less than 1/2 inch of moisture by next Monday in the Great Lakes region while 1/2 to 1 1/2 inches occurs in the northwest and 3/4 to 2 1/2 inches occurs from Kansas to southern Ohio, and Kentucky. Temperatures are expected to be near to below normal.
The southeast is expected to receive 1/10 to 3/4 inch of rain during the period in Georgia and South Carolina while varying from 1/2 to two inches in all other areas. Temperatures should be near to above normal.
Delta rainfall will range between 1/2 to 2 1/2 ” with temperatures should be near normal.
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.
HRW area is forecast to receive 1/4 to 1 1/2 ” favoring 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.
Contact Advance Trading at (800) 747-9021 or go to www.advance-trading.com.
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CBOT Settlements Quotes as of 2:07 p.m.
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