Morning report: Grain prices spill back into the red ahead of Tuesday’s session. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Down 15 to 17 cents
Soybeans: Down 17 to 18 cents
Wheat: Down 7 to 10 cents
Grain prices have had a tough go at finding any long-term forward momentum this summer. Monday’s action plus overnight trading proved the perfect example. Grain prices made solid inroads yesterday, only to have those wins erased heading into Tuesday’s session. Mostly stable crop conditions for corn and soybeans, plus harvest progress for wheat, is keeping supply concerns at bay for now. Additionally, high level talks are expected today between Russian and Turkish leaders to discuss a deal that would allow Ukrainian Black Sea grain exports to resume. Corn prices spilled 2.5% lower overnight, with soybeans facing 1.25% losses and wheat down around 1%.
Overseas stock markets were mixed but mostly higher. Asian markets closed with gains of as much as 0.65% in Japan, while European markets tended to trend slightly higher in midday trading. On Wall St., Dow futures moved 194 points higher overnight to 31,242, with big corporate earnings reports from companies such as Netflix, Tesla, United Airlines, Verizon and Twitter due later this week.
Energy futures were in the red overnight as traders continue to carefully monitor the latest supply and demand trends. Crude oil dropped 2%, staying just above $100 per barrel. Diesel tumbled 3.5% lower, with gasoline down more than 1.25%. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA shows little rainfall could fall anywhere on the Midwest and Plains between today and Friday, unless some popup showers change that dynamic. Official 6-to-10-day forecasts show a return to seasonally wet weather for the eastern Corn Belt is possible between July 24 and July 28, while most of the country will push through more hotter-than-normal conditions during this time.
On Monday, commodity funds were net buyers of all major grain contracts, including corn (+6,500), soybeans (+17,000), soymeal (+1,500), soyoil (+8,000) and CBOT wheat (+12,000).
NOTE: How does 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 shifted back into the red overnight after collecting solid gains on Monday. Bargain buyers have popped up here and there, but prices overall have met a fair amount of resistance anytime they have tried to move higher this summer. September and December futures faced big enough cuts that both contracts are back down below $6 per bushel.
Corn basis bids were steady to mixed across the central U.S. on Monday, moving as much as 10 cents higher at a Nebraska elevator and as much as 20 cents lower at an Illinois processor yesterday.
Corn export inspections for the week ending July 14 reached 42.3 million bushels, putting actuals on the higher end of trade estimates, which ranged between 27.6 million and 45.3 million bushels. China was the No. 1 destination, with 17.9 million bushels. Cumulative totals for the 2021/22 marketing year are now at 1.980 billion bushels.
Corn ratings were mostly steady in the top two quality categories, with 64% still rated in good-to-excellent condition this past week. Analysts were generally expecting to see a one-point decline, in contrast. Another 25% of the crop is rated fair (down one point from last week), with the remaining 11% rated poor or very poor (up a point from last week). More than a third (37%) of the crop is now silking, up from 15% a week ago. And 6% is in dough stage, versus the prior five-year average of 7%.
Yesterday, the U.S. International Trade Commission ruled against levying tariffs on nitrogen fertilizers that are imported from Russia and Trinidad and Tobago. Because of that, the price differential between urea and UAN should narrow, a move the National Corn Growers Association called a “welcome relief.” Farm Futures policy editor Jacqui Fatka took a closer look at the situation – click here to learn more.
From weather forecasts to rising interest rates, energy price trends and more – what factors that could affect grain prices are most worth watching as the summer progresses? Matthew Kruse, president of Commstock Investments, shared some ideas and advice in a recent Ag Marketing IQ blog – click here to learn more.
The preliminary report from the CBOT showed daily futures volume falling to 240,870, with open interest also down another 7,435. Options volume was also down slightly, to 95,853, and more heavily favors calls (60,569) over puts (35,284). Implied volatility for near-the-money September contracts fell to 41.1% with another 37 days until expiration.
Soybeans
Soybean prices followed a broad set of other commodities lower overnight, including corn, wheat and crude oil. Lower-than-expected crop quality ratings kept prices from eroding even lower. Still, August and September futures were down around 1.25% heading into Tuesday’s session. Soymeal prices slid around 0.5% lower, meantime, with soyoil futures dropping 1.75%.
On Monday, soybean basis bids fell 2 to 12 cents at three interior river terminals and were down 4 to 10 cents at two other Midwestern locations while holding steady elsewhere across the central U.S. on Monday.
Soybean export inspections reached 13.3 million bushels last week, which was near the middle of trade guesses that ranged between 3.7 million and 21.1 million bushels. China topped all destinations, with 5.0 million bushels. Cumulative totals for the current marketing season are now at 1.930 billion bushels.
Soybean quality slid a point lower, with analysts expecting to see no weekly change. Sixty-one percent of the crop is now rated in good-to-excellent condition, with 29% rated fair (unchanged from last week) and the remaining 10% rated poor or very poor (up a point from last week). Physiologically, 48% of the crop is now blooming and 14% is setting pods.
South Korea purchased 60,000 metric tons of soymeal, likely sourced from South America, in a private deal that closed earlier today. No purchases were made in an international tender for a similar amount that closed earlier this week. The grain is for arrival in mid-November.
The preliminary report from CBOT showed daily futures volume firm to 144,588 with open interest down 1,046. Options volume improved to 51,311 and still moderately favor calls (35,122) over puts (16,189). Implied volatility for near-the-money August contracts rose to 32.9% and expire in two days.
Wheat
Wheat prices slid moderately lower, facing cuts of around 0.75% to 1% as traders continue to assess harvest progress across the Northern Hemisphere and the prospect of improved exports out of the Black Sea region. Losses were relatively muted compared to other commodities, however.
Wheat export inspections only reached 6.8 million bushels last week. That was below the entire range of trade guesses, which came in between 9.2 million and 19.3 million bushels. Yemen was the No. 1 destination, with 2.0 million bushels. Cumulative totals for the 2022/23 marketing year are moderately below last year’s pace so far, with 77.5 million bushels.
Spring wheat quality ratings were somewhat scrambled this past week. Seventy-one percent of the crop is now rated in good-to-excellent condition, firming one point from a week ago. Another 23% is rated fair (down two points from last week), with the remaining 6% rated poor or very poor (up a point from last week). Around two-thirds (68%) of the crop is headed.
The winter wheat harvest made some inroads this past week, moving from 63% complete a week ago up to 70% through Sunday. That puts this season’s effort just behind the prior five-year average of 71%.
Looking back, the 2021/22 marketing year for wheat proved to be a bit of a mixed bag, according to Farm Futures grain market analyst Jacqueline Holland. “Total volumes lagged 19% behind prior year paces as China’s 2020/21 grains buying spree calmed down,” she notes in her latest E-corn-omics blog. “China only purchased approximately 31 million bushels of U.S. wheat in 2021/22, compared to an estimated 118 million bushels in 2020/21. But 2021/22 U.S. wheat export revenues through May 2022 surged 11% ($761M) higher than the same period a year ago to just shy of $7.6 billion thanks to stronger commodity prices this year.” Click here to learn more.
The preliminary report from CBOT showed daily SRW volume ease to 76,057, with open interest trending another 718 lower. Options volume fell to 31,873 and moderately favors calls (18,712) over puts (13,161). Implied volatility for September near-the-money options jumped to 51.8% and don’t expire for another 37 days.
Volume in HRW wheat fell to 31,895, with open interest trending 162 lower. Options volume is at 2,157 and still favors calls (1,222) over puts (935).
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