Corn prices cool slightlyCorn prices cool slightly
Afternoon report: Soybeans and most wheat contracts also in the red on Tuesday.
July 25, 2023
Grain prices were mixed but mostly lower after rising sharply in recent sessions due largely to Russian attacks on Ukrainian ports, grain warehouses and other key infrastructure, and as a heatwave moves across the Midwest this week. But traders locked in some profits on Tuesday, causing most grain prices to shift lower. Corn and soybeans both shifted around 0.5% lower. Kansas City HRW contracts saw similar losses, while MGEX spring wheat prices eased slightly lower. CBOT wheat bucked the overall trend, testing gains of around 0.5%.
The farther north you go in the Midwest between Wednesday and Saturday, the more likely you are to see some rainfall. Most areas north of I-80 will see at least some measurable moisture during that time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s new 8-to-14-day outlook predicts near-normal precipitation for the Corn Belt between August 1 and August 7, with some warmer-than-normal conditions probable for the lower Midwest and Mid-South next week.
On Wall St., the Dow continues to gather gains and is on pace to rise for the 12th consecutive session after firming 106 points in afternoon trading to 35,517. Investors are also eager to hear Federal Reserve Chair Jerome Powell’s next public comments, which are expected on Wednesday. Energy futures were mixed. Crude oil firmed another 1% higher to reach $78 per barrel. Diesel picked up 0.25%, while gasoline faded more than 1.25% lower. The U.S. Dollar firmed slightly.
On Monday, commodity funds were net buyers of all major grain contracts, including corn (+24,000), soybeans (+9,500), soymeal (+3,500), soyoil (+9,000) and CBOT wheat (+21,500).
Corn prices incurred double-digit losses overnight but were able to recover most of that during Tuesday’s session. Still prices finished around 0.5% lower on some net technical selling. September and December futures each dropped 2.5 cents to close at $5.58 and $5.6575, respectively.
Corn basis bids were mostly steady across the central U.S. on Tuesday but did trend as much as 5 cents higher at an Iowa river terminal and as much as 5 cents lower at an Iowa processor today.
Corn quality ratings were unchanged last week, with 57% of the crop in good-to-excellent condition as of Sunday. Another 30% is rated fair, with the remaining 13% rated poor or very poor – also unchanged from a week ago. State-by-state ratings range from Missouri (27% G/E) to North Carolina (79% G/E).
Physiologically, 68% of the crop is now silking, up from 47% a week ago and a bit ahead of the prior five-year average of 65%. And 16% has reached the dough stage, up from 7% a week ago and also faster than the prior five-year average of 14%.
Iran issued an international tender to purchase 4.7 million bushels of animal feed corn and 120,000 metric tons of soymeal from Brazil that closes on Wednesday. The grain is for shipment in August and September.
Algeria issued an international tender to purchase 4.7 million bushels of animal feed corn from South America that closes on Wednesday. The grain is for shipment in August.
Preliminary volume estimates were for 297,248 contracts, moving moderately below Monday’s final count of 380,139.
Soybean prices shifted 0.25% to 0.5% lower following a round of technical selling on Tuesday. August futures dropped 9.25 cents to $15.14, with September futures down 3.75 cents to $14.4950.
The rest of the soy complex moved higher, in contrast. Soymeal futures tracked 1.5% higher, with soyoil up around 0.5%.
Soybean basis bids were largely steady across the central U.S. on Tuesday but did jump as much as 15 cents higher at an Illinois processor while slumping as much as 30 cents lower at a Nebraska processor today.
Soybean quality ratings tracked a point lower last week, with 54% of the crop now in good-to-excellent condition. Another 32% is rated fair (steady from last week), with the remaining 14% rated poor or very poor (up a point from last week). Mexico (79% G/E) leads the way among the top 18 production states so far.
Physiologically, 70% of the crop is now blooming, up from 56% last week. And 35% is now setting pods, up from 20% last week. Both categories are trending above their respective five-year averages.
What is the relationship between USDA’s August yield estimates in relation to the agency’s final estimate? That’s a question that Brian Basting and Cesar Cruz explored in today’s Ag Marketing IQ blog. It may be a good reminder that past performances don’t necessarily predict future results – since 1991, the final yield has been higher than USDA’s August forecast 16 times … and lower 16 times. Click here to learn about more of Basting and Cruz’s findings.
Preliminary volume estimates were for 203,265 contracts, shifting slightly below Monday’s final count of 221,498.
Wheat prices were mixed but mostly lower as traders await fresh headlines from the Black Sea region. Harvest in the U.S. continues to replenish domestic supplies, meantime. September Chicago SRW futures gained 4 cents to $7.6150, September Kansas City HRW futures dropped 6 cents to $9.1250, and September MGEX spring wheat futures eased a penny lower to $9.35.
Spring wheat quality ratings faded another two points lower, with less than half (49%) of the crop now in good-to-excellent condition. Another 35% is rated fair (unchanged from last week), with the remaining 16% rated poor or very poor (up two points from last week). Nearly all (94%) of the crop is now headed, which is slightly faster than the prior five-year average of 93%.
Analysts were expecting to see winter wheat harvest progress at 70% through Sunday, but USDA only reported 68% completion. That was a decent push forward from the prior week’s tally of 56% but still moderately behind both 2022’s pace of 76% and the prior five-year average of 77%.
Russian President Vladimir Putin will be among the attendees of an international summit that will be held later this week in St. Petersburg. He plans to meet with multiple leaders of African nations during the event to discuss grain exports to the continent at the very time when Russia has been increasingly making Ukrainian exports out of the Black Sea more difficult. Russia has floated the idea that it can help Africa with an uptick in grain exports, including some free shipments as humanitarian aid.
Egypt is the world’s top wheat buyer, and the country’s imports so far in 2023 are up 34% above last year’s pace, with 208 million bushels through July 18. Egypt has also procured more than 139 million bushels domestically so far this year.
Preliminary volume estimates were for 182,163 CBOT contracts, easing slightly below Monday’s final count of 184,080.
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