July 5, 2023
Wheat prices were red-hot on Wednesday, with some contracts rising more than 5% on a wave of technical buying largely spurred by worries about U.S. yield and quality potential, coupled with concerns that Russia won’t renew a critical Black Sea shipping deal that is up for extension in less than two weeks. Corn and soybeans failed to follow suit, however, with rainy forecasts triggering some technical selling today.
Rains will be variable later this week, with some parts of Kansas and Oklahoma likely to see another 3” or more between Thursday and Sunday, while other areas (most notably parts of Minnesota and Wisconsin) won’t gather any measurable moisture during this time, per the latest 72-hour cumulative precipitation map from NOAA. Further out, NOAA’s new 8-to-14-day outlook predicts some seasonally wet weather for the eastern Corn Belt between July 12 and July 18, with warmer-than-normal conditions likely for the southern half of the country.
On Wall St., the Dow faded 151 points lower to 34,267 on expectations that interest rates could see additional increases later this year. Energy futures pushed higher, with crude oil up more than 3% this afternoon to $72 per barrel on bullish domestic demand. Diesel jumped more than 4.5% higher, with gasoline up around 2.25%. The U.S. Dollar firmed moderately.
On Monday, commodity funds were net buyers of corn (+500), soybeans (+8,500), soymeal (+500) and soyoil (+5,000) contracts but were net sellers of CBOT wheat (-2,500).
Corn prices faded back into the red following some post-holiday technical selling, incurring moderate losses in the process. July futures dropped 11.75 cents to $5.4550, with September futures down 2.75 cents to $4.8525.
Corn basis bids were largely steady across the central U.S. on Wednesday but did tilt 10 cents lower at an Iowa processor today.
USDA’s latest crop progress report, out late Monday afternoon, showed corn quality shifted slightly higher this past week, with 51% of the crop now rated in good-to-excellent condition through July 2. That also mirrored analyst expectations. Another 34% is rated fair (down a point from last week), with the remaining 15% rated poor or very poor (unchanged from last week). Physiologically, 8% of this season’s crop is now silking, up from 4% a week ago. That’s modestly faster than 2022’s pace of 7% but slightly behind the prior five-year average of 9%.
Brazil’s Anec estimates that the country’s corn exports will reach 249.6 million bushels in July, which would be a 12.6% year-over-year increase, if realized. The country’s safrinha (second) corn crop is now 20% harvested, versus 9% a week ago.
Per the latest data from the European Commission, EU corn imports ended the 2022/23 marketing year noticeably above last year’s pace after reaching 1.016 billion bushels through June 30. Ukraine, the United Kingdom, Canada, Russia and Serbia were the top five suppliers.
Mexico’s agriculture ministry estimates that the country’s 2023 corn production will reach 1.122 billion bushels. That would be a year-over-year increase of 7.5%, if realized. Total production is comprised of white (human consumption) and yellow (livestock consumption) corn.
South Korea purchased 2.6 million bushels of animal feed corn, either sourced from the United States or South America, in a private deal that closed earlier today. The grain is for arrival around November 30.
Preliminary volume estimates were for 367,240 contracts, moving slightly ahead of Monday’s final count of 340,556.
Soybean prices followed corn lower on Wednesday, with nearby contracts facing the most downside after some technical selling today. July futures lost 18 cents to $15.44, while August futures eased 3.25 cents to $14.6450.
The rest of the soy complex was mixed. Soymeal futures faced moderate cuts, while soyoil futures jumped almost 2% higher today.
Soybean basis bids fell 10 to 15 cents lower at two Midwestern processors and 20 cents at an Iowa river terminal while holding steady elsewhere across the central U.S. on Wednesday.
Analysts were expecting to see soybean quality improve slightly this past week, but USDA lowered ratings by a point, with 50% now in good-to-excellent condition through July 2. Another 35% is rated fair (unchanged from a week ago), with the remaining 15% rated poor or very poor (up a point from a week ago).
Physiologically, 24% of the crop is now blooming, up from 10% a week ago and moderately faster than the prior five-year average of 20%. And 4% is now setting pods, up from both 2022’s pace of 3% and the prior five-year average of 2%.
Brazil’s Anec estimates that the country’s soybean exports will reach 346.9 million bushels in July, which would be a year-over-year increase of nearly 35%, if realized. Brazilian soymeal exports are likely to hold steady from year-ago results of 2.25 million metric tons, according to Anec.
European Union soybean imports during the 2022/23 marketing year trended 10% below last year’s pace after reaching 478.4 million bushels through June 30. Brazil, the United States, Ukraine, Canada and Uruguay were the top five suppliers. EU soymeal imports were also modestly below last year’s pace, with 15.77 million metric tons.
Preliminary volume estimates were for 235,884 contracts, which was moderately below Monday’s final count of 327,696.
Wheat prices jumped higher as trader focus turned to poor U.S. crop quality and a slower-than-expected harvest pace so far. Russia’s latest geopolitical threats in the Black Sea region lent additional support. September Chicago SRW futures gained 31.75 cents to $6.7350, September Kansas City HRW futures climbed 47.25 cents to $8.4375, and September MGEX spring wheat futures rose 42.75 cents to $8.52.
USDA reported that 40% of the 2022/23 winter wheat crop was rated in good-to-excellent condition through July 2. Another 31% is rated fair, with the remaining 29% rated poor or very poor. Harvest progress reached 37% through Sunday, up from 24% a week ago. That makes this season’s pace slower than the prior five-year average of 46%.
European Union soft wheat exports during the 2022/23 marketing year are around 12% above last year’s pace after reaching 1.143 billion bushels through June 30. Morocco, Algeria, Nigeria, Egypt and Saudi Arabia were the top five customers.
Tunisia purchased 3.7 million bushels of soft wheat and 3.7 million bushels of durum wheat from optional origins (with a majority expected to be sourced from Russia), in an international tender that recently closed. The grain is for shipment between late July and early September, depending on the origin.
Algeria purchased between 7.3 million and 9.2 million bushels of durum wheat in an international tender that closed on Tuesday. The grain is for shipment in August and September.
Thailand purchased 2.2 million bushels of animal feed wheat, likely sourced from Bulgaria or Romania, in a tender that closed today. The grain is for shipment in September.
Japan hopes to purchase 2.2 million bushels of feed wheat and around 918,000 bushels of feed barley in a simultaneous buy-and-sell auction that will be held on July 12. If any purchases are made, the grain would be for arrival in late December.
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