Wheat prices take a beatingWheat prices take a beating
Afternoon report: Corn and soybeans also face major cuts in Friday’s session.
February 24, 2023
Export concerns and lingering sentiment that U.S. grain is priced out of some key overseas markets led to a robust round of technical selling on Friday that pushed some wheat contracts more than 4% lower by the close. Corn also saw significant cuts of around 1.5%. Soybean losses were relatively minimal but prices still trended moderately lower today.
Plenty of wet weather is on its way to the central U.S. over the next several days, with a large portion of the Corn Belt likely to see 1” or more fall between Saturday and Tuesday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s new 8-to-14-day outlook predicts more seasonally wet weather for the Midwest and Plains between March 3 and March 9, with warmer-than-normal conditions likely for most areas east of the Mississippi River.
On Wall St., the Dow sank 370 points lower to 32,783 following a bearish inflation report earlier today. (You can read more about that here.) Energy futures were mixed. Crude oil rose 1.25% this afternoon to $76 per barrel, and diesel jumped more than 3% higher. Gasoline failed to follow suit, with nearby contracts down around 1%. The U.S. Dollar firmed moderately.
On Thursday, commodity funds were net buyers of CBOT (+500) contracts but were net sellers of corn (-11,000), soybeans (-3,000) and soyoil (-2,000). Funds were roughly even when trading soymeal contracts yesterday.
Corn prices eroded steadily throughout Friday’s session on a round of technical selling spurred largely by export worries and spillover weakness from wheat. March futures dropped 10.25 cents to $6.50, with May futures down 10 cents to $6.4925.
Corn basis bids climbed 10 cents higher at a Nebraska processor on Friday while holding steady elsewhere across the central U.S.
Corn exports saw combined old and new crop sales of 33.4 million bushels for the week ending February 16. Old crop sales trended 30% below the prior four-week average. Total sales were near the middle of analyst estimates, which ranged between 19.7 million and 55.1 million bushels. Cumulative sales for the 2022/23 marketing year are still well below last year’s pace so far, with 538.4 million bushels.
Corn export shipments inched 7% above the prior four-week average to 27.1 million bushels. Mexico, Japan, Taiwan, Guatemala and Colombia were the top five destinations.
During yesterday’s Agricultural Outlook Forum, Agriculture Secretary Tom Vilsack reiterated the fact that the U.S. will do all it can to address Mexico’s plan to ban GMO corn imports. “If you begin to reject things that are not scientific or not supported by science, it’s a very slippery slope,” Vilsack said. “And it creates a circumstance where it would not only be difficult for us in terms of our relationship with Mexico, it would be difficult in terms of our relationship with all of our trade partners, and we’re just not going to go down that road.” Click here to learn more.
Several South Korean corn importers made a series of large corn purchases from optional origins in a series of international tenders and private deals that closed earlier today. Traders were speculating about these moves earlier this week, when South Korea cancelled a tender supposedly to wait and see if UDSA’s planting estimates would lower corn prices (it did).
A question on most people’s minds these days is just how long can this bull market last – especially considering USDA’s recent corn production estimate, which is north of 15 billion bushels? Matthew Kruse, president of Commstock Investments, explored what a bin-busting crop might do to current stocks and much more in the latest Ag Marketing IQ blog – click here to learn more.
Preliminary volume estimates were for 545,731 contracts, easing slightly below Thursday’s final count of 550,343.
Soybean prices followed other grains lower on Friday after the ensuing spillover weakness triggered some technical selling today. Additional cuts to Argentina’s production estimates kept prices from falling further. March futures dropped 5 cents to $15.2925, with May futures down 7.75 cents to $15.1950.
The rest of the soy complex was mixed. Soyoil prices slumped 1.5% lower, while soymeal prices firmed around 1% higher.
Soybean basis bids were mostly steady across the central U.S. on Friday but did pick up a penny at an Illinois river terminal while sliding 2 cents lower at an Iowa river terminal.
Soybean exports found combined old and new crop sales totaling 20.5 million bushels last week. Old crop sales were down 18% from the prior four-week average. That was also toward the lower end of trade estimates, which ranged between 11.0 million and 42.3 million bushels. Cumulative sales for the 2022/23 marketing year are still slightly ahead of last year’s pace so far, with 1.501 billion bushels.
Soybean export shipments were more robust but still slid 6% below the prior four-week average, with 63.9 million bushels. China, the Netherlands, Germany, Egypt and Indonesia were the top five destinations.
In Argentina, the Buenos Aires Grains Exchange again slashed its estimates for the country’s 2022/23 soybean production to 1.231 billion bushels amid multiple weather challenges throughout the season, including widespread drought and early frosts. The exchange also lowered its estimates for Argentine corn production in its latest report, falling to 1.614 billion bushels.
Preliminary volume estimates were for 272,908 contracts, moving moderately above Thursday’s final count of 212,832.
Wheat prices slumped as Black Sea export trends underline the fact that world supplies are still quite large, and overseas competition is keeping U.S. grain priced out of some markets. March Chicago SRW futures tumbled 32.75 cents to $7.0550, March Kansas City HRW futures fell 22.25 cents to $8.3950, and March MGEX spring wheat futures lost 23.25 cents to $8.8475.
Wheat exports reached 15.6 million bushels in old and new crop sales last week. Old crop sales climbed 39% above the prior four-week average. It was also toward the higher end of trade estimates, which ranged between 5.5 million and 23.9 million bushels. Cumulative sales for the 2022/23 marketing year are slightly behind last year’s pace, with 488.7 million bushels.
Wheat export shipments tracked 25% below the prior four-week average, with 12.4 million bushels. China, Japan, Thailand, Mexico and Taiwan were the top five destinations.
French farm office FranceAgriMer reports that the country’s 2022/23 soft wheat crop remains in great shape, with 95% of the crop rated in good-to-excellent condition through February 20. That’s a two-point improvement from a week ago. France’s barley winter barley crop quality is similar, with 94% rated in good-to-excellent condition over the same period.
Iraq purchased 9.2 million bushels of wheat, likely sourced from Australia, in an international tender that had a restricted number of participants that closed earlier this week. Additional details were not immediately available.
Preliminary volume estimates were for 152,139 CBOT contracts, shifting moderately above Thursday’s final count of 119,506.
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