July 26, 2023
Grain prices were mixed but mostly lower on Wednesday as traders continue to assess the latest weather forecasts and the geopolitical turmoil that continues to unfold in the Black Sea region. Soybeans found double-digit gains on strong supply and demand fundamentals after a large flash sale was announced this morning (more on that below). But corn prices eroded 3% lower, and wheat faced variable losses that mostly ranged between 4% and 5% after an ample round of technical selling.
Rains will be variable across the central U.S. later this week, with some parts of the Great Lakes region likely to gather another 1” or more between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. Further out, NOAA’s new 8-to-14-day outlook predicts some wetter-than-normal conditions for the Central Plains between August 2 and August 8, with warmer-than-normal temperatures likely for a large portion of the Corn Belt during that time.
On Wall St., the Dow is on pace to move higher for the 13th consecutive session after firming another 166 points in afternoon trading to 35,604. Meantime, the Federal Reserve raised interest rates by another quarter-point, sending them to the highest levels in 22 years. The Fed hopes recent hikes will help get inflation down to a target goal of 2%. Energy futures were mixed but mostly higher. Crude oil spilled 1% lower to $78 per barrel, while diesel rose 2.25% and gasoline moved nearly 2% higher. The U.S. Dollar softened slightly.
On Tuesday, commodity funds were net buyers of soymeal (+4,000) and CBOT wheat (+2,500) contracts but were net sellers of corn (-3,000), soybeans (-2,500) and soyoil (-1,000).
Corn prices faced substantial losses as quality ratings have improved by several points over the past few weeks, with more rain in the forecasts. The resulting round of technical selling left prices 3% lower by the close. September futures lost 16.75 cents to $5.4075, with December futures down 16.5 cents to $5.4875.
Corn basis bids were steady across the central U.S. on Wednesday.
Ethanol production rose for the second straight week after improving to a daily average of 1.094 million barrels for the week ending July 21. That was also the best weekly total since January 2020. Ethanol stocks increased by 2% last week.
Prior to Thursday morning’s export report from USDA, analysts expect the agency to show corn sales ranging between 11.8 million and 39.4 million bushels for the week ending July 20.
Grain traveling the nation’s railways reached another 14,981 carloads last week. That puts cumulative totals for 2023 at 544,635 carloads, which is a year-over-year decline of 11.1%.
Brazil’s Anec estimates that the country’s corn exports will reach 253.1 million bushels in July, which is modestly lower than its prior projection from a week ago.
South Africa, which is the continent’s top corn producer, is expecting its 2023 harvest to improve 5.7% to 643.8 million bushels. Around 53% of that total is white corn production for human consumption, with the remainder as yellow corn for animal feed.
Preliminary volume estimates were for 271,953 contracts, which was modestly below Tuesday’s final count of 297,248.
Soybean prices managed solid gains after a choppy session on Wednesday. Spillover weakness from corn and wheat provided some headwinds, but that wasn’t enough to overcome export optimism after two large flash sales were announced this morning. August futures climbed 41 cents to $15.5650, with September futures up 21.25 cents to $14.7175.
The rest of the soy complex was mixed. Soymeal futures rose 2% higher, while soyoil futures slumped more than 2% lower.
Soybean basis bids were mostly steady across the central U.S. on Wednesday but did track 10 cents lower at an Indiana processor and 20 cents lower at an Ohio river terminal today.
Private exporters announced two large sales of soybeans totaling 18.4 million bushels that are bound for unknown destinations during the 2023/24 marketing year, which begins September 1.
Ahead of tomorrow morning’s export report from USDA, analysts think the agency will show soybean sales ranging between 12.9 million and 44.1 million bushels for the week ending July 20. Analysts also expect to see soymeal sales ranging between 150,000 and 600,000 metric tons, plus up to 20,000 MT of soyoil sales.
Brazil’s Anec estimates that the country’s soybean exports will reach 334.7 million bushels in July, which was slightly higher than the group’s prior projection from a week ago. Anec also expects to see soymeal exports totaling 2.53 million metric tons this month.
USDA announced earlier this week a total of $129 million in health care grants that the agency says will help more than 5 million rural Americans. “USDA’s Emergency Rural Health Care Grants are helping strengthen rural America’s health care infrastructure to build for the future,” according to deputy secretary Xochitl Torres Small. Click here to learn more about some of the benefits the grants will provide.
Preliminary volume estimates were for 242,678 contracts, shifting moderately above Tuesday’s final count of 203,265.
Wheat prices faced significant cuts on news that NATO will be increasing surveillance in the Black Sea, and as a crop tour in North Dakota is reporting better-than expected spring wheat yield potential, which triggered a round of technical selling. September Chicago SRW futures lost 40.5 cents to $7.1975, September Kansas City HRW futures tumbled 49.25 cents to $8.6350, and September MGEX spring wheat futures dropped 35.5 cents to $8.9650.
Prior to Thursday morning’s export report from USDA, analysts expect the agency to show wheat sales ranging between 5.5 million and 14.7 million bushels for the week ending July 20.
French consultancy Agritel estimates that the country’s soft wheat harvest will come in around 1.279 billion bushels this season. That’s a 1.3% improvement above the prior five-year average, although Agritel also noted multiple weather challenges earlier this year, including “late frosts in April in eastern France and, above all, a total lack of rain from mid-May to mid-June.” France is Europe’s top grain producer.
Bangladesh issued a new international tender to purchase 1.8 million bushels of milling wheat from optional origins that closes on August 13. The grain is for shipment within 40 days after a contract is signed.
Preliminary volume estimates were for 169,935 CBOT contracts, easing slightly below Tuesday’s final count of 182,163.
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