Afternoon report: Old crop futures fell today while new crop corn and beans held on with nearly non-existent gains.
Note: Guest commentary provided by Cat Sullivan, ag risk management advisor for Advance Trading, Inc.
Corn
The rain forecasts across the eastern Corn Belt through early next week led to a drop in prices. September corn settled at $6.04 1/4 , down 3/4 of a cent on the day.
Early this morning the USDA announced a sale of 133 K MT of 22-23 corn to China. Later in the session this announcement was retracted based on updated information received from the exporter. Canada again cancelled corn, 2.1 mbu this week after canceling 4.0 mbu last week. Yet, the USDA quietly raised its forecast for 21-22 Canadian corn imports from 150 mbu in June to 212 in this month’s WASDE. For what it’s worth, Canadian year-to-date purchases from the U.S. total 145 and year-to-date shipments total 134 mbu.
Another element of uncertainty, some say China will approve and buy Brazil corn this summer. Others are of the opinion it will not happen until after the 1st of the year. Also, noted from weekly export sales, origin sales of old crop corn to “Other Asia” (excludes China) are at a 13-year low. This is further seen as South Korea’s NOFI group was said to have bought 135 K of late October arrival corn from either South America or South Africa today.
U.S. Corn ratings are expected to land 1 to 3 points lower on Monday. Ratings compare to 64% last week, 65% last year, and the 5-year average of 66%.
Market analysts are beginning to take note of the high heat in Europe and potential impact on yields in the region. With Ukraine having limited export capability, would further deterioration in the EU crop encourage purchases from the U.S.? Or, perhaps, Brazil instead? The cost to freight Brazil CNF to Rotterdam is anywhere from 8 to 20 cents per bushel cheaper than the Gulf for the October to December delivery period.
Speaking of heat, temperatures rose to 108 F in parts of China yesterday. This may not prove positive for corn yields there and could affect import numbers. Perhaps they will need U.S. corn?
The BA Grain Exchange estimates the Argentine corn harvest is 58% complete. This trails last year by 4% and is 12% behind their 5-year average. The crop is still estimated at 49 but with yields improving and decent, their estimate is likely to rise in the coming weeks.
Soybeans
Exports of soybean and meal caused jitters in the market today which led to a drop in the complex. The negative NOPA oil stocks number received little reaction. Even so, August Soybeans settled at 14.66, down 5 3/4 cents on the day.
More comments are surfacing that the USDA’s 21-22 soybean export forecast is over-stated.
Soybean ratings are expected to be unchanged to 1 lower on Monday. This is compared to 62% last week, 58% last year, and the 63% 5-year average.
Germany’s association of farm cooperatives trimmed its 22-23 rapeseed estimate 10 K to 3.77 MMT, equating to more than an 8% increase over last year. Curious to see how this might affect bean oil…
The June NOPA Soybean Crush report was released today. The take-away: Slightly negative soybeans as the YTD crush remains below USDA expectations; Oil stocks were well above expectations suggesting continuing sluggish off-take while domestic meal disappearance remains solid. June crush was reported at 165.7, above both the Reuters and Bloomberg averages of 164.5 and 164.6 as well as 13.3 million more than the June 2021 figure. September-June crush stands at 1.738 billion, 33 mbu/2.0% ahead of the 20-21 pace but remains below the level suggested by the 3.0% increase forecast by the USDA.
Wheat
Wheat faltered early in the session and did not rally back to a mentionable degree. September Chicago Wheat closed at 7.76 3/4 , down 18 1/4 cents on the day.
Spring wheat is estimated to be 1 point higher on Monday at 71%, against 11% last year and the 54% average. Winter wheat harvest is approaching 75%, versus 63% last week, 71% last year and the same 5-year average.
The BA Grain Exchange keeps Argentine seedings at 6.2 million but caution that the dryness may lead to eventual reductions. No production estimate as of yet but Rosario is at 17.7 (down 800 K) and the USDA is optimistic at 19.5 million.
Despite the rumors from yesterday of the possibility the black sea may be reopening with Ukrainian wheat, a possible bottleneck in ramping up Ukraine grain exports is damage to the transportation infrastructure. It will take time to rebuild roads and bridges and to clear ports. This pressure on the markets may be a bit premature. We don’t have a solution to the food insecurity problems that can be fixed in an immediate time frame. Though not a huge change, German farm cooperative association trimmed their wheat crop from 22.6 to 22.5. Their crop is still up 5.3 from 2021. The Rosario Grain Exchange also cut their estimates of domestic wheat harvest to 17.7 million tonnes from 18.5 million previously, mainly due to a reduction of the wheat planted area now seen at 5.9 million hectares.
As to French wheat, as of July 11, the percentage of soft wheat rated good to excellent improved by one point to 64%. However, the rating continues to report below the 7-year average of 67%. To their credit, the harvest is 50% complete, ahead of last year’s level.
Weather
The market focus right now is on weather and rightly so. But looking beyond the summer, the fall corn export outlook is by no means certain.
The U.S. Corn Belt is forecast to receive 1/3 to two inches of rain through Thursday in 70% of the region with a few amounts of 2 1/2 to three inches likely as the far western areas continue to be the driest. Temperatures are forecast to be near to slightly above normal.
The Southeast U.S. is predicted to receive 3/4 to 2 1/2 ” during this period with a few amounts as high as 3-4″. Temperatures are forecast to be near normal. Rainfall in the Delta region is seen between 1/10 to 3/4 ” for around 75% of the region with some amounts of more than one inch, especially in the southeast. Temperatures are forecast to be near to above normal.
The Hard Red Winter Wheat Belt should see 1/10 to 3/4 ” during the period over 30% of the region. Temperatures are forecast to be above normal. Canadian Prairie rainfall for the period will vary between 1/3rd to 2″ over 65% of the region with a few amounts greater. Temperatures are forecast to be near to above normal.
Europe is forecast to receive little to no rain through Thursday with near normal temperatures in the northeast and well above normal temperatures in the west.
Contact Advance Trading at (800) 747-9021 or go to www.advance-trading.com.
Information provided may include opinions of the author and is subject to the following disclosures:
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 Quotes as of 2:00 p.m.
Get our top content delivered right to your inbox. Subscribe to our morning and afternoon newsletters!
