Note: Guest comment provided by Cat Sullivan, Risk Management Advisor for Advance Trading, Inc.
Forecasts of rain in the Eastern Corn Belt through early next week have pushed prices lower. September corn settled at $6.04¼, down ¾ of a cent on the day.
Early this morning, the USDA announced a sale of 133,000 tons of 22-23 corn to China. Later in the session, this announcement was withdrawn based on updated information received from the exporter. Canada again canceled corn, 2.1 mbu this week after canceling 4.0 mbu last week. Still, the USDA quietly raised its Canadian corn import forecast for 21-22 from 150 mbu in June to 212 in this month’s WASDE. For what it’s worth, Canadian purchases year-to-date in the US total 145 and shipments year-to-date total 134 mbu.
Another element of uncertainty is that some say China will approve and buy corn from Brazil this summer. Others are of the opinion that it will only happen after the 1st of the year. In addition, based on weekly export sales, origin sales of old crop maize to “Other Asia” (excluding China) are at their lowest level in 13 years. This is further considered as the South Korean group NOFI would have bought today 135,000 of corn that arrived at the end of October from South America or South Africa.
US corn ratings are expected to drop 1 to 3 points on Monday. Ratings compare to 64% last week, 65% last year and the 5-year average of 66%.
Market analysts are starting to take note of the strong heat in Europe and the potential impact on yields in the region. With Ukraine having limited export capacity, would a further deterioration in the EU harvest encourage purchases from the US? Or, perhaps, Brazil instead? Brazil CNF’s freight cost to Rotterdam is 8 to 20 cents per bushel cheaper than the Gulf for the October to December delivery period.
Speaking of heat, temperatures reached 108 F in parts of China yesterday. This might not prove positive for corn yields there and might affect the number of imports. Maybe they will need American corn?
The BA Grain Exchange estimates that the Argentine maize harvest is 58% complete. This trails last year by 4% and is 12% behind their 5-year average. The harvest is still estimated at 49 but with improving and decent yields, their estimate should increase in the coming weeks.
Exports of soybeans and meal caused jitters in the market today, which led to a decline in the complex. The negative NOPA oil inventories figure elicited little reaction. Even so, August soybeans settled at 14.66, down 5¾ cents on the day.
More and more comments are surfacing that the USDA’s 21-22 soybean export forecast is overstated.
Soybean odds are expected to be unchanged at 1 lower on Monday. This is compared to 62% last week, 58% last year and the 5 year average of 63%.
The German Association of Agricultural Cooperatives has reduced its estimate of 22-23 rapeseed from 10,000 to 3.77 MMT, which is an increase of more than 8% compared to last year. Curious how this might affect bean oil…
The June NOPA Soybean Crush report was released today. Takeaways: Soybeans slightly negative as year-to-date crush remains below USDA expectations; Oil inventories were well above expectations, suggesting a continuation of slow drawdowns while the disappearance of domestic meals remains solid. The June crash was reported at 165.7, above the Reuters and Bloomberg averages of 164.5 and 164.6 as well as 13.3 million more than the June 2021 figure. September-June stands at 1.738 billion, 33 mbu/2.0% ahead of the 20-21 pace, but still below the level suggested by the USDA’s 3.0% rise forecast.
Wheat weakened early in the session and did not rebound to a noticeable degree. September Chicago Wheat closed at 7.76¾, down 18¼ cents on the day.
Spring wheat is estimated Monday up 1 point to 71%, against 11% last year and the average of 54%. The winter wheat harvest is approaching 75%, compared to 63% last week, 71% last year and the same five-year average.
The BA Grain Exchange maintains Argentine plantings at 6.2 million, but warns drought could lead to possible reductions. No production estimate yet but Rosario is at 17.7 (down 800K) and the USDA is optimistic at 19.5m.
Despite yesterday’s rumors about the possibility of the Black Sea reopening with Ukrainian wheat, a possible bottleneck in increasing Ukrainian grain exports is damage to transport infrastructure. It will take time to rebuild roads and bridges and to clean up ports. This pressure on the markets is perhaps a little premature. We have no solution to the problems of food insecurity that can be solved immediately. Although not a huge change, the German agricultural cooperative association reduced its wheat harvest from 22.6 to 22.5. Their harvest is still up 5.3% from 2021. The Rosario grain exchange also cut its estimates for the national wheat harvest to 17.7 million tonnes from 18.5 million previously, mainly due to a reduction in the area sown to wheat, which now stands at 5.9 million hectares.
As for French wheat, on July 11, the share of soft wheat rated good to excellent had improved by one point to 64%. However, the rating continues to be below the 7-year average of 67%. To their credit, the harvest is 50% complete, ahead of last year’s level.
The market is currently focused on the weather and rightly so. But beyond the summer, prospects for corn exports in the fall are by no means certain.
The U.S. Corn Belt is forecast to get 1/3 to 2 inches of rain through Thursday across 70% of the region with some 2 1/2 to 3 inches likely as far western regions continue to be the driest. Temperatures should be near to slightly above normal.
The Southeastern United States is expected to receive 3/4 to 2 ½” over this period with some amounts as high as 3-4″. Temperatures should be near normal. Rainfall in the delta region ranges from 1/10 to ¾” for about 75% of the region with amounts over an inch, particularly in the southeast. Temperatures are expected to be near to above the normal.
The Red Winter Durum Belt is expected to see 1/10 to ¾” during the period over 30% of the region. Temperatures are expected to be above normal. Precipitation across the Canadian Prairies for the period will range between 1/3 and 2 inches over 65% of the area with a few higher amounts. Temperatures should be near to above normal.
Europe is expected to receive little to no rain through Thursday with temperatures near normal in the northeast and well above normal in the west.
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CBOT quotes at 2:00 p.m.
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