Written Commentary
SOYBEANS
The soybean complex was higher across the board led by strength in soybean oil which was up 120 – 160. July-23 bean oil has retraced nearly all of last week’s price plunge in response to the lower EPA biofuels mandates. Over the near to intermediate term demand for soybean oil will continue to rise as renewable biodiesel facilities under construction continue to come on line. It will take years to determine the industries long term sustainability without the 100% backing with Federal mandates. July/Nov soybean spread made a new high for the move to $2.01, before drifting back into the close. Export inspections at only 5 mil. bu. were at the low end of expectations and well below the 19 mil. bu. needed per week to reach the USDA export forecast of 2.0 bil. bu.
CORN
Prices were mixed with July-23 closing $.06 ½ higher, while deferred contracts were within $.01 of unchanged. The session low in July-23 held just above its 100 day MA at $6.19 ¾. The July/Dec spread recovered $.06 today after falling nearly $.50 from the May high at $.85. Weekend weather was generally as expected as some drought areas received beneficial moisture, while others were left with little to no rainfall. Forecasts are for little to no rain over key growing areas thru the middle part of this week, as 100 plus degree temperatures are expected to push north from Texas across southern parts of the Midwest for a few days. With the movement of a Bermuda high pressure ridge, the US gulf may open up allowing beneficially moisture into the central and eastern corn belt next week. Both the NWS 6-10 and 8-14 day outlooks are suggesting normal to above normal precipitation across large areas of the Midwest. Brazil’s 2nd crop harvest has reached only 9%. This weekend Mexico started imposing a 50% tariff on white corn imports, a move to boost domestic production while striving to limit the import of GMO corn. Export inspections at only 21 mil. bu. were the lowest in nearly 5 months while also well below the 44 mil. bu. needed per week to reach the USDA export forecast. If the average US corn average yield fell 11.5 bpa to 170 bpa, production would fall by 1.0 bil. bu. to 14.30 bil. reducing ending stocks to 1.3 bil. In all likelihood however new crop usage would fail to reach the current USDA forecast of 14.485 bil. In addition old crop stocks will likely be 50 – 100 mil. bu. higher, based on weak exports and ethanol usage, barring a bullish stock surprise on Friday.
WHEAT
Prices were mixed with KC up $.05 – $.07, MGEX down $.01 – $.03, while Chicago was $.06 – $.09 lower. While the military coup attempt in Russia was short-lived, its impact is potentially far reaching if it restricts Russia’s ability to export wheat and other commodities to Africa and middle eastern nations. So far the coup attempt hasn’t impacted grain shipments allowing prices to back off from their initial surge. Despite Russian wheat production expected to slip 14% this year, their exports are expected to rise 2 mmt to 46.5 mmt, representing 22% of the global trade. Chicago July-23 traded over $7.50 for the first time in 4 months before slipping. Export inspections at 7.5 mil. bu. were at the low end of expectations and roughly half of the weekly total needed to reach the USDA export forecast. Winter wheat harvest progress likely to have reached 28 – 30% up from LW’s 15%, still below the historical average of 33%.
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