July 24, 2023
CBOT wheat contracts finished Monday’s session with limit-up gains, and other grain prices moved substantially higher as Russian attacks on Ukrainian ports and grain storage facilities continued earlier today. Corn prices jumped mor than 6% higher, with some wheat contracts rising more than 8%. Soybean gains were more moderate, closing with gains of around 1.5%.
Not much rain is expected across the central U.S. between Tuesday and Friday, although some fields could gather as much as 0.25” during this time, per the latest 72-hour cumulative precipitation map from NOAA. Further out, the agency’s new 8-to-14-day outlook predicts warmer-than-normal conditions for some of the Corn Belt between July 31 and August 6, with wetter-than-normal weather likely for most areas west of the Mississippi River.
On Wall St., the Dow is on pace for its eleventh straight day of gains after trending 215 points higher in afternoon trading to 35,442, making it the longest lasting rally since 2017. Energy futures also continued to push higher, with crude oil trending more than 2% higher this afternoon to $78 per barrel. Diesel moved 1% higher, with gasoline up more than 3%. The U.S. Dollar firmed moderately.
On Friday, commodity funds were net buyers of soymeal (+2,000) and soyoil (+2,000) contracts but were net sellers of corn (-7,500), soybeans (-1,000) and CBOT wheat (-11,000).
Corn prices captured substantial gains on Monday after reports of new Russian attacks on Ukrainian infrastructure triggered a round of technical buying. Spillover support from other grains and energy prices added to today’s tailwinds. September futures rose 34 cents to $5.61, with December futures up 33 cents to $5.6925.
Corn basis bids were steady to mixed after trending as much as 15 cents higher at a Nebraska processor and as much as 10 cents lower at an Iowa river terminal on Monday.
Corn export inspections spilled moderately below last week’s tally after only reaching 12.2 million bushels. That was also on the low end of trade estimates, which ranged between 9.8 million and 23.6 million bushels. Mexico was the No. 1 destination, with 6.2 million bushels. Cumulative totals for the 2022/23 marketing year are still noticeably below last year’s pace, with 1.348 billion bushels.
Prior to this afternoon’s crop progress report from USDA, analysts expect corn quality ratings to move another point higher, with 58% of the crop in good-to-excellent condition through July 23. Individual trade guesses ranged between 54% and 60%.
The three W’s – war, weather and worry – have been on traders’ minds in recent sessions, notes grain market analyst Bryce Knorr. “All three elements are on full display heading into the final full week in July, when conditions typically make or break corn yields,” he says. “While the fate of soybean production plays out more in August, prices for both crops showed signs of fatigue, at the least, and perhaps submission, at the worst.” Knorr breaks down these factors in greater detail in today’s Ag Marketing IQ blog – click here to learn more.
Brazilian consultancy AgRural estimates that 47% of the country’s second corn crop has been harvested through July 20. That’s noticeably below last year’s pace of 62%. Nonetheless, this season’s second corn crop should reach a new record production of 4.051 billion bushels.
Preliminary volume estimates were for 380,139 contracts, which was moderately above Friday’s final count of 308,826.
Soybean prices enjoyed gains of around 1.5% thanks largely to spillover strength from red-hot corn and wheat prices, which spurred a round of technical buying on Monday. August futures improved 21.25 cents to $15.2225, with September futures up 24 cents to $14.53.
The rest of the soy complex was also in the green today. Soymeal prices firmed nearly 1.25% higher, with soyoil futures raking in gains of 3.75%.
Soybean basis bids were mostly steady to soft on Monday after tracking 5 to 25 cents lower across four Midwestern processors. An Iowa river terminal bucked the overall trend after firming 9 cents today.
Private exporters announced the sale of 4.4 million bushels of soybeans for delivery to China during the 2023/24 marketing year, which begins September 1. Individual trade guesses ranged between 52% and 57%, however.
Soybean export inspections reached 10.4 million bushels, which was a week-over-week improvement of 77%. That was also toward the higher end of analyst estimates, which ranged between 3.7 million and 11.0 million bushels. Germany was the No. 1 destination, with 4.1 million bushels. Cumulative totals for the 2022/23 marketing year are still slightly below last year’s pace, with 1.844 billion bushels.
Ahead of this afternoon’s crop progress report from USDA, analysts think the agency will hold soybean quality ratings steady, with 55% of the crop in good-to-excellent condition through July 23.
Preliminary volume estimates were for 221,498 contracts, trending moderately higher than Friday’s final count of 180,499.
Wheat prices benefited from a massive bout of technical buying on continued concerns pouring out of the Black Sea region. September Chicago SRW futures jumped 60 cents to $7.5750, September Kansas City HRW futures climbed 56 cents to $9.1625, and September MGEX spring wheat futures rose 44.5 cents to $9.3150.
Wheat export inspections exceeded expectations last week after reaching 13.2 million bushels. That was better than the entire set of trade guesses, which ranged between 5.5 million and 12.9 million bushels. The Philippines topped all destinations, with 5.2 million bushels. Cumulative totals for the 2023/24 marketing year are slightly slower than last year’s pace so far, with 79.1 million bushels.
Ahead of Monday afternoon’s crop progress report from USDA, analysts expect to see winter wheat harvest move from 56% completion a week ago up to 70% through Sunday. And spring wheat quality ratings are expected to hold steady, with 51% of the crop in good-to-excellent condition.
A Russian drone strike carried out earlier today led to the destruction of multiple Ukrainian grain warehouses. “This recent escalation poses serious risks to the security in the Black Sea,” Romanian President Klaus Iohannis said on Twitter, while U.N. Secretary-General Antonio Guterres called for Russia to rejoin the Black Sea shipping deal that expired a week ago. Russia also promised “increase vigilance” after it said it found traces of explosives on an inbound ship that was going to pick up grain that had been docked in Ukraine earlier this year.
Meantime, Russian consultancy Sovecon estimates that the country’s July wheat exports will see a monthly increase of 23% with a new projection of 158 million bushels. Russia is the world’s top wheat exporter.
Preliminary volume estimates were for 184,080 CBOT contracts, shifting moderately above Friday’s final count of 157,022.
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