June 14, 2023
Grain prices enjoyed solid gains on Tuesday, which prompted some profit-taking on Wednesday – especially as traders hold lingering concerns about export demand as another weekly USDA report is fast-approaching. Nearby corn and soybean contracts were both down around 0.75%. Wheat losses were variable – CBOT contracts showed the most downside after sinking 1% lower.
Wet weather will be moving across the Central and Southern Plains between Thursday and Sunday, with some areas ready to receive another 1” or more to close out the week, per the latest 72-hour cumulative precipitation map from NOAA. Areas farther east will remain relatively dry, in contrast. The agency’s new 8-to-14-day outlook shows that more seasonally wet weather may be in store for the Northern Plains and upper Midwest between June 21 and June 27, with warmer-than-normal conditions likely for the Corn Belt later this month.
On Wall St., the Dow spilled 363 points lower to 33,848 as investors expressed anxiety that although the Federal Reserve did not raise interest rates this month, it indicated it may do so later in 2023. Energy futures also declined today, with crude oil falling 1.5% this afternoon to $68 per barrel. Diesel also dropped 1.5%, with gasoline down around 0.5%. The U.S. Dollar softened slightly.
On Tuesday, commodity funds were net buyers of all major grain contracts, including corn (+1,000), soybeans (+12,000), soymeal (+1,000), soyoil (+5,500) and CBOT wheat (+2,000).
Corn prices were steady to soft as traders attempted to balance the latest weather forecasts against problematic demand patterns. Weakness in a broad set of other commodities added to today’s downward pressure. July futures dropped 4.5 cents to $6.08, while September futures held steady at $5.46.
Corn basis bids were steady to weak across the central U.S. after sliding 3 to 5 cents lower at four Midwestern locations on Wednesday.
Ethanol production for the week ending June 9 was down modestly from the prior week’s tally but stayed above the 1-million-barrel-per-day benchmark once again after posting a daily average of 1.018 million barrels, per the latest data from the U.S. Energy Information Administration, out Wednesday morning. Ethanol stocks tightened 3% last week.
Ahead of Thursday morning’s export report from USDA, analysts are in disagreement over how corn sales will come in for the week ending June 8, with individual trade guesses ranging between net reductions of 3.9 million bushels and net sales of 35.4 million bushels.
Brazil’s Anec estimates that the country’s corn exports will reach 62.6 million bushels in June. That’s a slightly below it’s prior projection from a week ago.
Ukraine’s total grain exports during the 2022/23 marketing year are now running just slightly below last year’s pace as the country continues to push through logistical challenges amid the ongoing Russian invasion. That includes corn sales totaling 1.098 billion bushels, plus another 637.8 million bushels of wheat sales. Ukraine is among the world’s top exporters of both commodities.
How do you avoid “analysis paralysis?” One good strategy is having marketing strategies in place before volatility occurs, according to Brian Basting, commodity research analyst with Advance Trading. “These markets are unpredictable,” he admits. “An effective risk management plan is extremely difficult, if not impossible, to execute if it is not carefully constructed prior to an unexpected increase in market volatility.” Catch up on more of Basting’s latest analysis in yesterday’s Ag Marketing IQ blog – click here for details.
Grain traveling the nation’s railways added another 16,523 carloads last week. That brings cumulative totals for 2023 to 454,832 carloads, which is a year-over-year decrease of 8.4% so far.
Preliminary volume estimates were for 468,358 contracts, tracking slightly below Tuesday’s final count of 488,933.
Soybean prices shifted moderately lower on a round of technical selling and profit-taking on Wednesday. July futures dropped 9.25 cents to $13.90, with August futures down 1.75 cents to $13.20. The rest of the soy complex was mixed. Soymeal futures tumbled nearly 2% lower, while soyoil firmed around 0.75% higher.
Soybean basis bids were mostly steady to weak after fading 5 to 10 cents lower across five Midwestern locations on Wednesday. An Iowa processor bucked the overall trend after trending 10 cents higher today.
Prior to tomorrow morning’s export report from USDA, analysts think the agency will show soybean sales ranging between 12.9 million and 33.1 million bushels for the week ending June 8. Analysts also expect to see soymeal sales ranging between 150,000 and 400,000 metric tons, plus up to 15,000 MT of soyoil sales.
Brazil’s Anec expects the country’s soybean exports to reach 542.3 million bushels in June. That’s moderately above its prior projection from a week ago. Anec also anticipates Brazilian soymeal exports reaching 2.45 million metric tons this month.
Preliminary volume estimates were for 282,350 contracts, shifting moderately below Tuesday’s final count of 359,591.
Wheat prices pushed through a choppy session to settle with moderate losses following a round of technical selling on Wednesday. September Chicago SRW futures fell 7 cents to $6.41, September Kansas City HRW futures dropped 7 cents to $7.8325, and September MGEX spring wheat futures eased 3.5 cents to $8.06.
Ahead of tomorrow morning’s export report from USDA, analysts expect the agency to show wheat sales ranging between 7.3 million and 16.5 million bushels for the week ending June 8.
Moscow officials are again threatening not to allow further extensions of a deal that allows safe passage for shipping vessels through the Black Sea, which is otherwise set to expire in mid-July. “The extension of the grain deal was a goodwill gesture,” according to Kremlin spokesperson Dmitry Peskov. “But unfortunately, in the absence of reciprocity, the lack of desire on the part of the collective West to fulfil part of the agreements concerning Russia, this manifestation of goodwill and political will cannot be endless. That is why our exit from the deal after its expiry is being considered. But there is no decision yet.”
Preliminary volume estimates were for 151,334 CBOT contracts, which was moderately below Tuesday’s final count of 197,887.
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