June 12, 2023
Expectations for more dry weather in the U.S. later this month, coupled with lingering concerns that a critical Black Sea shipping deal won’t receive additional extensions, was enough to push most grain prices higher on Monday. Corn was the biggest benefactor, with prices jumping 2% to 3.5% higher. Wheat gains were variable, with some contracts tracking 0.75% higher. Soybeans failed to follow suit after a disappointing round of export inspection data, which triggered some technical selling today.
Dry weather is probable for much of the Midwest between Tuesday and Friday, although parts of the Great Lakes region and eastern Corn Belt could gather another 0.5” or more during this time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s new 8-to-14-day outlook predicts wetter-than-normal conditions entering parts of the Northern Plains and upper Midwest between June 19 and June 25, with warmer-than-normal temperatures probable for most of the central U.S. next week.
On Wall St., the Dow tested gains of 70 points in afternoon trading, moving to 33,947 as investors remain hopeful that the Federal Reserve won’t make an additional interest rate hike when it meets later this week. Energy futures faced major cuts, with crude oil tumbling nearly 4.5% lower to $67 per barrel on record-high domestic output. Diesel dropped 2.25%, with gasoline eroding 4% lower. The U.S. Dollar firmed slightly.
On Friday, commodity funds were net buyers of soybeans (+11,000), soyoil (+8,000) and CBOT wheat (+1,000) contracts but were net sellers of corn (-3,500) and soymeal (-3,000).
Corn prices gathered double-digit gains on analyst expectations that crop quality will degrade another two points lower this week, and with more dry weather likely for the central U.S. later this month. July futures rose 13 cents to $6.1725, and September futures climbed 19.25 cents to $5.4375.
Corn basis bids were steady to soft after dropping 5 to 20 cents lower at four Midwestern locations on Monday.
Corn export inspections made it to 46.0 million bushels last week, easing modestly below the prior week’s tally of 47.5 million bushels. That was on the higher end of trade estimates, which ranged between 29.5 million and 51.2 million bushels. Mexico was the No. 1 destination, with 13.7 million bushels. Cumulative totals for the 2022/23 marketing year are still substantially below last year’s pace so far, with 1.224 billion bushels.
Prior to this afternoon’s crop progress report from USDA, analysts expect the agency to trim corn quality ratings by another two points, with 62% in good-to-excellent condition through June 11. Individual trade guesses ranged between 59% and 64%.
Brazilian consultancy AgRural reports that the country’s second corn crop harvest is now underway, with 2.2% completion so far. That’s behind last year’s pace of 6.6% so far. Still, AgRural is expecting a record-breaking total corn production for 2022/23 with its latest projection of 5.016 billion bushels.
Ukraine’s total grain exports for the 2022/23 marketing year are down slightly year-over-year as the country continues to face a myriad of production and logistical challenges amid the ongoing Russian invasion. That includes corn sales totaling 1.091 billion bushels, plus another 591.6 million bushels of wheat sales.
Algeria has purchased an unknown (as of now) amount of animal feed corn from optional origins in an international tender for 5.5 million bushels that closed last Thursday. The grain is for shipment between June and August.
Preliminary volume estimates were for 464,688 contracts, moving moderately above Friday’s final count of 354,461.
Soybean prices sputtered despite testing modest overnight gains after traders shifted to technical selling following a lower-than-expected set of export inspection data from USDA this morning. July futures lost 12.5 cents to $13.74, with August futures down 3 cents to $12.93.
The rest of the soy complex was mixed. Soyoil futures faded 1% lower, while soymeal futures found fractional gains.
Soybean basis bids were largely steady across the central U.S. on Monday after dropping 5 cents at an Indiana processor and rising 5 cents at an Iowa river terminal today.
Soybean export inspections were pedestrian last week, with just 5.2 million bushels. That was below the entire range of trade estimates, which came in between 6.4 million and 14.7 million bushels. Italy was the top destination, with 2.0 million bushels. Cumulative totals for the 2022/23 marketing year are trending slightly below last year’s pace, with 1.794 billion bushels.
Ahead of this afternoon’s crop progress report from USDA, analysts think the agency will show soybean quality ratings fade two points lower in the week through June 11, with 62% of the crop in good-to-excellent condition. Individual trade guesses ranged between 57% and 62%. Planting progress is expected to move from 91% a week ago up to 96% through Sunday.
Preliminary volume estimates were for 264,446 contracts, sliding slightly below Friday’s final count of 275,749.
Wheat prices followed corn higher on lingering concerns about dismal crop quality, which triggered some technical buying on Monday. September Chicago SRW futures gained 5 cents to $6.4675, September Kansas City HRW futures inched half a penny higher to $7.9425, and September MGEX spring wheat futures picked up 1.5 cents to $8.14.
Wheat export inspections reached 9.1 million bushels last week. That was toward the lower end of trade estimates, which ranged between 7.3 million and 15.6 million bushels. The Philippines topped all destinations, with 3.2 million bushels. Cumulative totals for the new 2023/24 marketing year, which began June 1, are down from last year’s pace so far, with an initial volume of 11.6 million bushels.
Prior to this afternoon’s crop progress report from USDA, analysts expect to see winter wheat quality ratings improve a point, with 37% in good-to-excellent condition through June 11. Harvest is expected to move from 4% a week ago up to 10% through Sunday. Spring wheat quality ratings could slide a point lower, meantime, with 63% rated in good-to-excellent condition over the same period.
The Secretary General of the United Nations expressed concerns today that Russia will not approve additional extensions for a key deal that allows safe passage for shipping vessels in the Black Sea, which is up for renewal in mid-July. “I am concerned and we are working hard in order to make sure that it will be possible to maintain the Black Sea initiative and at the same time that we are able to go on in our work to facilitate Russian exports,” according to Antonio Guterres. Russia and Ukraine are both among the world’s top wheat exporters.
Preliminary volume estimates were for 167,463 CBOT contracts, which was moderately below Friday’s final count of 228,383.
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