Afternoon report: Rain and cooler weather are predicted for next week across most of the Corn Belt
Note: Guest commentary provided by Cat Sullivan, ag risk management advisor for Advance Trading, Inc.
Corn
The lack of significant rainfall during the next week and above normal heat in the western corn belt lifted futures today. September corn settled at $6.12 1/4 , up 8 cents on the day.
Corn Export Inspections were released this morning but did not seem to make much of an impact on futures. At 42.3 mbu and near the upper end of the 28-45 estimated range, corn had a good showing from China at 17.9, along with 9.0 mbu to Japan and 12.8 to Mexico. The census-adjusted implied weekly rate looks to be 24 mbu. Milo revealed a 4.4 mbu number, versus 1.7 per week needed. Of those sales, 2.9 went to China. As mentioned, Friday afternoon the Daily Sales Retraction of 133 K MT of 22-23 corn was not sold to China, despite the release earlier that day by the USDA.
Worldwide, grain shipments continue to draw attention. China’s June corn imports edged up from 2.1 MMT last month to 2.2 but were below June 2021’s 3.75 MMT total. Sep-June imports are off 2.6 million at 19.8/7.5%. The USDA forecast is for a 6.5/22% decline in exports. Ukraine’s corn exports fell 16% to 210 K MT last week and the 2-week July total of 459 K is just 6% below last year. Brazil is expected to start exporting corn to China in 2023, according to Valor Economico, a local newspaper, stated on Thursday. The day before, the Reuters agency said shipments would start in 2022, while the country’s grain exporters’ association Anec had indicated shipments are expected to take place only next year due to Chinese corn specifications. The Russian defense ministry said that Russia’s proposals on how to resume Ukrainian grain exports were supported by negotiators, and that an agreement is close.
The USDA will release the weekly crop ratings and conditions reports from last week today (Monday) at 3pm CDT. Corn ratings are expected drop one to three points lower, versus 64% last week; 65% last year; and the 5-year average of 66%.
Harvest is moving along in Brazil for their second corn crop. IMEA says 85% of the Mato Grosso crop was harvested as of Friday, which is up 11 points from last week to this week.
Soybeans
The drier and hotter weather outlook pushed futures sharply higher. Strong gains particularly in soybean oil along with soybean meal added to the rally. August Soybeans settled at 14.97 1/4 , up 31 1/4 cents on the day with November futures closing up 38 cents at 13.80 1/4 .
Export Inspections for soybeans came in at 13.3 mbu, which was virtually unchanged from last week. You could call it mid-range for the estimates as the trade was expecting 4-21 with 27.4 per week needed to meet the USDA numbers. China nearly “doubled” from last week, from 2.8 to 5. Even so, that isn’t exactly an exciting export figure.
This afternoon’s Soybean Good-to-Excellent ratings are expected to be unchanged to 1 point lower. Last week was reported at 62%. This time last year ratings were at 58% and the 5-year average for this time period is 63%.
Brazil’s 2022-23 soybean planted area was estimated to increase 2.6% to a record, and production could end up at 151.5 million tons, also a record, according to Safras & Mercado. The growth in soybean area is expected to slow over the long term if producers plant more corn amid potential exports to China.
Indonesia on Saturday announced they will remove all palm export levies until August 31 and set the max palm oil export tax of $240/ton from September 1 when the reference price is above $1,500 per MT.
China soybean reserve sales of imported soybeans were small again at just 15 K of the 1/2 MMT offered and a signal that soybean procurements might be slow for the short term. Another 1/2 MMT auction is scheduled for July 22
European Union countries are expected to reap a record soybean crop in 2022 due to increased acreage, with Italy retaining its leading role in the E.U., according to association UFOP. Soybean production in the 2022/23 season will exceed 3 million mt, an increase of 15% compared to last year.
Indonesia exported only 678,000 tons of palm oil in May, which is down 77% from May of 2021. But during this period, the export ban was in place to May 23 (started April 28).
Wheat
Egypt tendered for wheat today with U.S. included in the sales mix. European wheat was also sharply higher. September Chicago Wheat closed at 8.12 3/4 , up 36 cents on the day which took back Friday’s losses of just over 18 cents and nearly gained 18 more.
Wheat Export Inspections were less than stellar. 6.8 mbu were reported versus 9-19 expected and approximately 16 per week needed to fulfill the USDA’s estimates. Brazil did lift 960 K, so that is something. Wheat Inspections by Class were 100 K this week for HRS (3.2 last week), HRW came in at 3.6 mbu (versus 4.1 last week), and SRW shipped 300 K this week (3.0); with SW at 2.9 (1.1).
Ukraine’s weekly wheat exports more than doubled to 80 K, with the total since July 1 at 132 K, a decline of almost 50% versus a year ago. The Philippines was reported to have bought two cargoes of October-November feed wheat from either the Black Sea/European origins or from Australia. And in a move that we hope will help U.S. exports, the Russian government has again increased grain export taxes for the July 20-26 period, set at RUB426/mt or $104.04/mt.
U.S. Spring wheat is estimated to land 1 point higher this afternoon at 71%, against 11% last year and the 54% average. Winter wheat harvest is approaching 75% complete, versus 63% last week, 71% this time last year and the 71% 5-year average.
According to Safras, Brazil’s wheat production could total 10.42 million tonnes in 2022, up by 34.5% from previous year. French soft wheat conditions were improved one point to 64% while the harvest reached the halfway point. Wheat ratings lag well behind the 76% reported at the same point of 2021, according to weekly data from Franceagrimer.
Weather
The market focus continues to trade the weather. With many areas above normal temps this week, including many areas hanging out near 100 F markets are trading for dry crops.
The western U.S. Corn Belt is predicted to receive less than 1/2 inch of moisture through Monday except in the eastern Dakotas, Minnesota, and Wisconsin where 1/2 to 2 1/3 inches of rain is expected.
Eastern Midwest rainfall is forecast to range from 3/4 to 2 1/2 inches with the Ohio River Basin wettest.
Northern Illinois is unlikely to get more than 1/2 inch of moisture. Temperatures should be near to above normal.
The southeastern states are forecast to 1/4 to 3/4 inch of rain and local amounts of one to two inches with temperatures predicted to be near normal.
The Delta is forecast to 1/4 to one inch of rain through Sunday with a few local totals to 1 1/2 inches as temperatures average near to above normal.
U.S. temperatures in the central and eastern Midwest are expected to warm from near to slightly below normal early to mid-week this week to near to above normal late this week and into next week. The western Midwest and especially the Great Plains are likely be very warm to hot this week. And the heat may prevail in the central U.S. through the end of July. Temperatures in the western United States should be well above normal through much of the next ten days.
U.S. Hard Red Winter Wheat Belt is forecast to receive a trace to 1/2 inch of moisture through Sunday in less than 30% of the region. Temperatures are predicted to be well above normal.
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 2:03 p.m.
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