Grain prices were mixed but mostly lower on Tuesday, weighed down by recent rains in the Midwest and Plains that will set the state for high yield potential, along with record-breaking production in Brazil. Corn prices closed with losses of nearly2%, with soybeans down 2.5%. Most wheat prices were also down, although spring wheat futures managed gains of around 0.5% today.
The Plains and parts of the Corn Belt will see some light to moderate rainfall between today and Friday, per the latest 72-hour cumulative precipitation map from NOAA. Few places will see more than 0.75” during this time. NOAA’s new 8-to-14-day outlook predicts seasonally dry weather for the Ohio River Valley between May 23 and May 29, meantime, with warmer-than-normal conditions likely for the northern half of the country.
On Wall St, the Dow faded 245 points lower to 33,101 on lingering worries about the debt ceiling and some worse-than-expected corporate earnings reports. Energy futures also trended lower, with crude oil down 0.5% to $70 per barrel. Diesel dropped 0.75%, while gas suffered a very minor technical setback. The U.S. Dollar firmed slightly.
On Monday, commodity funds were net buyers of corn (+4,500), soybeans (+4,500), soyoil (+1,000) and CBOT wheat (+8,500) contracts but were net sellers of soyoil (-1,000).
Corn prices were slashed on Tuesday amid mostly favorable weather in the United States, and with a bumper safrinha crop nearing harvest in Brazil. July futures dropped 10.75 cents to $5.8175, with September futures down 10.25 cents to $5.0775.
Corn basis bids were steady to mixed across the central U.S. on Tuesday after trending as much as 2 cents higher at an Iowa processor and as much as 11 cents lower at an Illinois river terminal today.
Per UDSA’s latest crop progress report, corn plantings have made big strides recently, rising from 49% a week ago to 65% as of May 14. Although analysts predicted a slightly higher progress of around 68%, the current pace for 2023 surpasses last year's rate of 45% by a substantial margin and remains six points above the average for the previous five years, which stood at 59%. Individual state progress varies widely, from 96% in Missouri down to 5% in North Dakota. Thirty percent of the crop is now emerged.
Brazil’s Anec is expecting an uptick in the country’s corn exports in May after increasing its estimate from 12.6 million bushels a week ago up to 22.5 million bushels.
The Ukrainian Grain Association (UGA) is expecting to see a 30% drop in the country’s corn exports during the 2023/24 marketing year. Considering the risks brought about by the Russian invasion, corn is relatively mor expensive to grow, dry and transport, so it may be less lucrative to grow versus other crops. Consequently, corn exports may only reach 748 million bushels this season.
Per the latest data from the European Commission, EU corn imports during the 2022/23 marketing year have reached 927.9 million bushels through May 14, which is 65% higher than last year’s pace so far. Ukraine, Brazil, Canada, Serbia and Russia were the top five suppliers.
High commodity prices have a lot of obvious upside, but there are some dangers lurking as well, warns JJ Keske, ag risk management advisor with Advance Trading. “One negative to these higher prices may be how they have affected how farmers approach marketing,” he points out. “Did we pick up unhealthy habits over the last couple of seasons?” Keske offers some advice on how to prevent yourself from locking up and waiting for the market to do what you want it to do in today’s Ag Marketing IQ blog – click here for details.
Preliminary volume estimates were for 278,747 contracts, trending 12% below Monday’s final count of 317,919.
Soybean prices faced dueling seasonal pressures of a fast-planted crop in the U.S. coupled with a record-breaking harvest in Brazil. July futures tumbled 36.25 cents to $13.6450, with August futures losing 31.5 cents to $12.9675.
The rest of the soy complex was also in the red today. Soymeal futures dropped more than 0.75%, while soyoil futures faced severe cuts of more than 4.5%.
Soybean basis bids held steady across the central U.S. on Tuesday.
Soybean plantings reached 49% through May 14, which was two points below the average trade guess of 51%. Still, this year’s planting pace is much faster than 27% in 2022 and the five-year average of 36%. State-by-state progress ranges from 78% in Louisiana down to 2% in North Dakota. Twenty percent of the crop is now emerged.
European Union soybean imports during the 2022/23 marketing year are down 12% so far after reaching 404.5 million bushels through May 14. The United States, Brazil, Ukraine, Canada and Uruguay are the top five suppliers. EU soymeal imports are trending 4% lower year-over-year, with 13.67 million metric tons.
Brazil’s Anec slightly raised its projection for the country’s soybean exports in May, which it now estimates will reach 579.1 million bushels. Brazil expects the country to export an additional 2.6 million metric tons of soymeal this month.
Preliminary volume estimates were for 236,007 contracts, moving moderately ahead of Monday’s final count of 177,692.
Wheat prices were mixed but mostly lower after some uneven technical maneuvering on Tuesday. July Chicago SRW futures dropped 13.25 cents to $6.4750, July Kansas City HRW futures eased 1.25 cents to $8.97, and July MGEX spring wheat futures added 4.25 cents to $8.7750.
Winter wheat quality saw some shifts in lower-rated fields, but the percentage of the crop rated in good-to-excellent condition held steady, at 29%. Another 30% of the crop is now rated fair (up three points from last week), with the remaining 41% rated poor or very poor (down three points from last week). In Kansas, the No. 1 production state, just 10% of the crop is rated good or excellent. Physiologically, nearly half (49%) of the crop is now headed.
Spring wheat planting progress reached 40% as of Sunday, up from the prior week’s tally of 24% and two points ahead of the prior trade guess of 39%. This year’s pace is three points ahead of 2022 but still noticeably behind the prior five-year average of 57%. Thirteen percent of the crop is emerged.
European Union soft wheat exports are trending 12% higher in the 2022/23 marketing year after reaching 998.3 million bushels through May 14. Morocco, Algeria, Nigeria, Egypt and Saudi Arabia were the top five destinations.
In Argentina, the Buenos Aires Grains Exchange is counting on 2023/24 wheat production to bounce back from the dismal 455.6 million bushels last season, which was plagued with historical drought. The exchange expects new crop production to move 45% higher, to 661.4 million bushels. EU barley exports are down 14% year-over-year, with 266.4 million bushels.
Japan issued a regular tender to purchase 4.2 million bushels of food-quality wheat from the United States, Canada and Australia that closes on Thursday. Of the total, 19% is expected to be sourced from the U.S. The grain is for shipment in July.
Preliminary volume estimates were for 107,373 CBOT contracts, which was slightly higher than Monday’s final tally of 99,202.