Morning report: Corn, soybeans and wheat all in the red ahead of Thursday’s session. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Down 7 to 9 cents
Soybeans: Down 15 to 18 cents
Wheat: Down 2 to 3 cents
Rains across the central U.S. are expected to be scattered but mostly helpful for corn and soybean production over the next several days, although there will also be some scorching temperatures through large portions of the Plains, Mid-South and lower Midwest over the next several days. But is that any real surprise – today is actually the hottest day of the year, on average! Overnight, corn sank around 1.5% lower and soybeans dropped 1%, while wheat prices were mostly trimmed by 0.25% to 0.5% heading into Thursday’s session.
Overseas stock markets were mixed. In Asia, Japan’s Nikkei index closed nearly 0.5% higher while other markets slumped as much as 1.5% lower. European markets were narrowly mixed in midday trading. On Wall St., Dow futures tracked 88 points lower to 31,765 ahead of the opening bell as investors continue to rake in and digest the latest corporate earnings reports.
Energy futures saw severe cuts overnight. Crude oil dropped more than 4.5% to $95 per barrel amid reports of rising supplies and lingering questions about demand. Diesel dropped 4%, while gasoline tumbled more than 6% lower. The U.S. Dollar softened fractionally.
The latest 72-hour precipitation map from NOAA shows a decent soaking could be in store for parts of the Midwest between today and Sunday, with parts of Iowa, Minnesota, northern Illinois, Wisconsin and Michigan likely to see the highest amounts. Official 6-to-10-day forecasts show widespread wetter-than-normal conditions returning to nearly the entire Corn Belt between July 26 and July 30, with seasonally hot weather lingering in the Central and Southern Plains, as well as the eastern Corn Belt, during this time.
On Wednesday, commodity funds were net buyers of CBOT wheat (+5,000) contracts but were net sellers of corn (-4,000), soybeans (-12,000), soymeal (-500) and soyoil (-6,000).
NOTE: How do your farm’s crop conditions stack up against other operations around the country? Click this link to take the Feedback from the Field survey and share updates about your farm’s crop development. We review and upload results regularly to the FFTF Google MyMap, so farmers can see others’ responses from across the country.
Corn
Corn prices continued to fade further below the $6 per bushel benchmark overnight as mid-range forecasts suggest more favorable weather will help close out a scorching hot July as the crop heads into the critical pollination phase (37% was silking through Sunday). For the most part, prices have been on a pretty consistent downward slide since late April and early May, when December futures had briefly topped $8 per bushel.
Corn basis bids were steady to weak across the central U.S. on Wednesday after dropping 5 to 12 cents across five Midwestern locations yesterday.
Ethanol production saw moderate improvements for the week ending July 15, per the latest data from the U.S. Energy Information Administration, with a daily average of 1.034 million barrels. That’s up from 1.005 million barrels per day the prior week, and it marks the ninth consecutive week that the daily average has exceeded the 1-million-barrel benchmark.
Ahead of the next USDA grain export report, out later today, analysts expect the agency to show corn sales ranging between zero and 27.6 million bushels for the week ending July 14.
South Korea purchased 5.4 million bushels of animal feed corn, expected to be sourced from South America and/or South Africa, in an international tender that closed earlier today. The grain is for arrival in mid-November.
Is the current market volatility managing you, or are you strategically managing market volatility – without letting emotions get the better of you? That’s easier said than done, but Brady Huck, risk advisor with Advance Trading, offers some relevant pointers in a recent Ag Marketing IQ blog – click here to learn more.
The preliminary report from the CBOT showed daily futures volume falling to 220,807, with open interest shifting another 1,814 higher. Options volume fell moderately to 89,823 and still moderately favors calls (52,858) over puts (36,965). Implied volatility for near-the-money September contracts fell to 37.2% and don’t expire for another 35 days.
Soybeans
Soybean prices saw moderate cuts after following corn lower overnight as traders attempt to balance past bouts of yield-damaging heat with more favorable forecasts moving forward. Prices have been on a pretty clear downward trajectory since early June, with a few intermittent rallies scattered through the past handful of weeks.
On Wednesday, soybean basis bids were steady to weak after eroding lower across half a dozen Midwestern locations and losing as much as 55 cents at an Indiana processor yesterday. The moves were attributed to slowing demand for near-term supplies.
Yesterday, private exporters announced to USDA the sale of 5.0 million bushels of soybeans for delivery during the 2022/23 marketing year, which begins September 1.
Ahead of the next USDA grain export report, out later this morning, analysts expressed some disagreement over what soybean sales might look like for the week ending July 14. Individual trade guesses ranged between net reductions of 7.3 million and net sales of 25.7 million bushels. Analysts also think the agency will show soymeal sales ranging between zero and 450,000 million metric tons last week, plus up to 35,000 MT of soyoil sales.
It’s now the 2022/23 marketing year for European Union soybean imports, which reached 11.7 million bushels over the first 10 days of July, per the European Commission. That’s moderately below last year’s pace so far. EU soymeal imports are trending a bit higher, in contrast, with 440,619 metric tons.
With commodity prices still historically high, some farmers have been eyeing possible soybean/wheat double-crop setups. That’s certainly a possibility for some operations – particularly the farther south they are. But in other areas, it would be an uphill battle to make this rotation feasible. Farm Futures executive editor Mike Wilson dug into the details – click here to learn more.
The preliminary report from CBOT showed daily futures volume ease to 149,334 while open interest firmed 3,601. Options volume shifted to 71,103 and more heavily favors calls (45,337) over puts (25,766). Implied volatility for near-the-money August contracts held steady at 33.3% and expire today.
Wheat
Wheat prices faced moderate cuts overnight as traders await fresh headlines from Ukraine and continue to generally dock prices over harvest progress across the Northern Hemisphere, which has replenished flagging global supplies. Losses were relatively muted compared to overnight action for corn and soybeans, however.
Prior to the next export report from USDA, analysts expect to see the agency show wheat sales ranging between 11.0 million and 31.2 million bushels for the week ending July 14.
Egypt reported that it had cancelled a tender to purchase wheat after price offers were higher than expected. The country had initially hoped to import wheat from some combination of Argentina, Australia, Brazil, Canada and the United States.
Do you know what the Rule of 72 is? What about the term “greenflation?” Is it actually worth keeping cash on hand in an inflationary environment, even if it losses purchasing power by doing so? Dr. David Kohl ponders these questions and others in his latest Road Warriors blog – click here to learn more.
The preliminary report from CBOT showed daily SRW volume drop to 72,346, while open interest firmed 1,390. Options volume fell to 23,839 and narrowly favors calls (12,081) over puts (11,758). Implied volatility for September near-the-money options fell to 47.4% and don’t expire for another 35 days.
Volume in HRW wheat eased to 27,718, with open interest trending 1,450 higher. Options volume is at 2,546 and is evenly spread between calls (1,292) over puts (1,254).
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