Written Commentary
SOYBEANS
The soybean complex was higher across the board with soybeans $.25 – $.30 higher, soybean meal steady to $7 higher, while soybean oil was up 145 – 165. July-23 soybeans were above the $14 level for the first time in a month before pulling back into the close. Next resistance above today’s high is the 100 day MA, at $14.46, which is also near last month’s high. Today’s rally in Nov-23 soybeans stopped just shy of $12.50. July-23 soybean oil closed right at its 100 day MA, the highest close in a month. The EPA pushed back the deadline to release biofuel blending requirements for 2023 thru 2025 for 1 week until June 21st. Soybean crop conditions slipped 3% to 59% G/E in line with expectations. My crop condition index (CC index) for soybeans slipped to 80.6 this week, the lowest since 2008, even lower than the 80.7 from 2012. Dr. Michael Cordonnier has lowered his US soybean yield to 51.5 bpa, and production to 4.480 bil. bu. vs. the USDA forecast of 4.510 bil. and yield of 52.0 bpa. Emergence has reached 86%, vs. 68% YA and the 5-year Ave. of 70%. Conab increased their Brazilian production forecast by only 1 mmt to 155.7 mmt, well below the updated USDA est. of 156 mmt. Conab’s export forecast at 95.6 mmt however is above the USDA est. of 93 mmt. Driven by record global production of nearly 411 mmt, up 11% from last year’s record production, global stocks/use for 2023/24 MY are expected to reach 32%, highest in 5 years.
CORN
July closed down $.05 while new crop was up $.01 – $.02 ½. After trading above its 100 day MA the past 2 sessions July pulled back, likely pressured by a pickup in Brazilian selling as harvest of their 2nd crop advances from its very early stages. Storage capacity is already strained following a record soybean harvest. Dec-23 also breached its 100 day MA resistance intraday before pulling back. Next resistance is the Mch-23 high of 5.76 ¼. Although much of the Midwest will receive some moisture over the next 5 to 7 days, cumulative totals will likely not be enough to ease the deepening drought concerns in key growing areas. Heaviest rains this week are expected in the SE. Temperatures are forecast to stay seasonably mild until late this week when temperatures start to rise as a high pressure ridge builds across portions of Midwest into the early part of next week. The ridge is then expected to flatten out and shift west reducing the potential for extended heat across the nation’s midsection. Corn conditions slipped 3% to 61% G/E in line with expectations. My crop condition index (CC index) slipped to 81.1 this week, down from 81.8 and the lowest since 2019. Dr. Michael Cordonnier lowered his US corn yield 1 bpa to 178 bpa, with production at 14.860 bil. bu. vs. the USDA forecast of 15.265 bil. and yield of 181.5 bpa. Conab increased their Brazilian production forecast by only .2 mmt to 125.7 mmt, also well below the updated USDA est. of 132 mmt. Conab’s export forecast at 48 mmt is well below the USDA est. of 55 mmt. Global stocks/use among the top 4 global exporters is forecast to increase for the 3rd consecutive year to nearly 12%, the highest in 5 years. Long way to go however, starting with the US 2023 crop.
WHEAT
Prices were mixed in choppy 2 sided trade. Early strength gave way following pullbacks in spot corn and soybeans from their morning highs. Chicago finished $.01 – $.02 better, while MGEX and KC were down $.02 – $.05. Chicago July-23 briefly traded above last week’s high and its 50 day MA at $6.45 ¾ before pulling back. Conab increased their Brazilian wheat production est. to 9.7 mmt, still slightly below the USDA forecast of 10 mmt. Winter wheat ratings improved another 2% to 38% G/E. In addition there was a 3% drop in the Poor/VP ratings to 31%. The WW CC index improved to 75.1, the 5th consecutive weekly increase, the highest of the growing season and well above the 72.0 from YA. 89% of the WW is headed, in line with both YA and 5-year Ave. My model is forecasting an average yield of 47.6 bpa with production at 1.204 bil. well above the USDA forecast of 1.136 bil. and yield of 44.9 bpa. Last year’s yield was 47.0 bpa. Harvest advanced only 4% to 8% complete, just below the historical Ave. Global stocks/use among major world exporters is expected to drop to 14.5%, lowest in over a decade.
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