Waning China demand slashes corn pricesWaning China demand slashes corn prices
Afternoon report: For the second time this week, a large cancellation was reported to USDA.
April 27, 2023
It’s been a pretty terrible week for grain prices so far this week due to lingering demand concerns, and prices continued to crumble on Thursday as the latest selloff marched forward in earnest. Corn prices eroded 2% to 3% lower, with soybeans fading around 0.5% lower. Wheat losses were variable, mostly ranging between 1.25% and 3.25%.
The Eastern Seaboard will gather large amounts of rainfall totaling 1.5” or more between Friday and Monday, per NOAA’s latest 72-hour cumulative precipitation map. Most of the Midwest will also see some rains over the weekend, but few areas will see much more than 0.25”. Further out, NOAA’s new 8-to-14-day outlook predicts a return to seasonally dry weather for a considerable portion of the Corn Belt between May 4 and May 10, with warmer-than-normal conditions developing across the plains during this time.
On Wall St., the Dow climbed 483 points higher in afternoon trading to 33,785 following some stronger-than-expected corporate earnings reports from Meta, Honeywell and others. Energy prices were mixed but mostly lower. Crude oil firmed nearly 0.5% higher to $74 per barrel. Diesel dropped 1%, with gasoline down more than 0.5%. The U.S. Dollar firmed slightly.
On Wednesday, commodity funds were net sellers of corn (-5,000), soybeans (-1,000), soymeal (-2,000) and CBOT wheat (-3,500) contracts but were net buyers of soyoil (+750).
Corn prices faced severe cuts after China cancelled a large sale for the second time this week, which triggered plenty of technical selling that led to double-digit losses by the close. May futures dropped 13.25 cents to $6.2825, while July futures lost 19.25 cents to $5.8175.
Corn basis bids were largely steady across the central U.S. on Thursday but did trend 3 cents lower at an Iowa river terminal and a penny higher at an Illinois river terminal today.
Private exporters announced to USDA the cancellation of 9.2 million bushels of corn that was originally bound for China during the 2022/23 marketing year, which began September 1.
Old crop corn exports reached 15.7 million bushels, with no additional new crop sales last week. Old crop sales were 49% below the prior four-week average. Total sales were toward the lower end of trade estimates, which ranged between 3.9 million and 47.2 million bushels. Cumulative sales for the 2022/23 marketing year remain substantially below last year’s pace so far, with 931.9 million bushels since September 1.
Corn export shipments managed to stay 7% above the prior four-week average, reaching 42.4 million bushels. Japan, Mexico, China, Colombia and Peru were the top five destinations.
The European Commission slightly trimmed its estimates for 2023/24 EU corn production, with a new projection of 2.535 billion bushels. EU corn imports are also expected to decline in the upcoming marketing year, with a new estimate of 669.3 million bushels.
Preliminary volume estimates were for 511,415 contracts, nearly doubling Wednesday’s final count of 274,008.
Soybean prices emerged from a choppy session on Thursday with moderate losses after downward pressure from planting progress and spillover weakness from corn and wheat led to some technical selling today. May futures dropped 7.25 cents to $14.2875, with July futures down 9 cents to $14.0575.
The rest of the soy complex was mixed. Soyoil futures tumbled almost 3% lower, while nearby soymeal contracts firmed 0.5% higher.
Soybean basis bids were mostly steady across the central U.S. on Thursday but did tilt 10 cents higher at an Ohio elevator while easing a penny lower at an Illinois river terminal today.
Soybean export sales only reached 11.4 million bushels last week, but that was still 38% above the prior four-week average. Total sales were slightly on the low end of trade estimates, which ranged between 2.8 million and 23.9 million bushels. Cumulative totals for the 2022/23 marketing year are fractionally below last year’s pace, with 1.717 billion bushels.
Soybean export shipments eroded 35% below the prior four-week average, to 16.7 million bushels. China, Germany, Japan, Mexico and Indonesia were the top five destinations.
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Preliminary volume estimates were for 210,904 contracts, which was moderately lower than Wednesday’s final count of 260,910.
Wheat prices followed overseas prices lower, with spillover weakness from other commodities adding to today’s technical setback. High expectations for Canada’s crop (expecting the most planted acres in more than two decades) is another bearish factor in the mix this week. July Chicago SRW futures dropped 11.5 cents to $6.3050, July Kansas City HRW futures fell 15.25 cents to $7.68, and July MGEX spring wheat futures lost 26.25 cents to $7.8675.
Wheat exports fared better than corn and soybeans after gathering old and new crop sales totaling 16.9 million bushels last week. That was also toward the higher end of analyst estimates, which ranged between 2.8 million and 23.0 million bushels. Cumulative totals for the 2022/23 marketing year are slightly behind last year’s pace, with 595.0 million bushels.
Wheat export shipments improved 23% above the prior four-week average, with 11.2 million bushels. Japan, Mexico, the Philippines, Taiwan and South Korea were the top five destinations.
Russia is again calling for “full implementation” of a deal that allows for safe passage of shipping vessels in the Black Sea, which due for extension (or expiration) on May 18. Russia wants to remove current obstacles slowing down its own grain and fertilizer exports. Negotiations for a possible extension of the deal are ongoing.
The European Commission slightly reduced its estimates for 2023/24 EU wheat production, which is now projected to reach 4.784 billion bushels. Expected EU wheat exports for the upcoming marketing year are stable from last month’s estimates of 1.176 billion bushels.
Taiwan issued an international tender to purchase 1.9 million bushels of grade 1 milling wheat, sourced from the United States, that closes on May 5. The grain is for shipment between June 21 and July 5.
Iraq purchased around 5.5 million bushels of wheat from Australia in a restricted international tender that closed on Wednesday. Additional details about the sale were not immediately available.
Preliminary volume estimates were for 146,203 CBOT contracts, firming moderately above Wednesday’s final count of 105,100.
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