Written Commentary
SOYBEANS
The soybean complex was mixed with spot beans slightly lower while deferred contracts were up $.10 – $.12. Meal was also mixed with nearby contracts up $1 with deferred futures down $1 – $2. Oil was 160 – 200 higher. Nov-23 traded to a 13 month high before backing off. Next resistance is the contract high of $14.48 ¼ from April-22. Aug-23 meal jumped to a new 3 month high before backing up. Next resistance is the April high at $456. Aug-23 oil surged to an 8 month high. Next resistance 68.52. With the current drought extending into the Canadian prairie’s, Canada’s canola production will be reduced, which in turn provides a boost to US oilseed prices. Spot board crush margins surged $.25 today to $2.11 bu., a 5 month high. Current crop ratings suggest a national ave. yield of 51.5 bpa and production of 4.260 bil. compared to the USDA est. of 52 bpa and 4.30 bil. By just dropping the US yield to match YA at 49.5 bpa would reduce ending stocks to 70 mil. bu., well below pipeline min. requiring a significantly higher level of demand rationing. With the added weather and production uncertainty, market volatility will remain high thru the growing season. Old crop exports likely to remain minimal with US prices still above SA thru Sept. Oct. forward US is at a slight discount to Brazil. Export sales tomorrow are expected to range from 10 – 25 mil. bu. of soybeans, 100 – 400k tons meal, and 0 – 10k tons oil. In tomorrow’s drought monitor update I expect to see further reduction in drought across the nation’s midsection with deepening drought in the north. OI yesterday was up nearly 8,000 contracts in soybeans, up 900 in meal, and down 1,258 in oil.
CORN
Prices were up another $.16 – $.18, with today’s close roughly $.10 off session highs. Dec-23 settled just below $5.55, the midpoint between the June high and July low. US weather still features a ridge of high pressure forecast to shift over the plains and western Midwest early next week generating much above normal temperatures with limited prospects for rain into early Aug. The GFS model has suggested daily highs of 105+ across the heart of the Midwest by late next week. The 6-10 and 8-14 day NWS outlooks are threatening to yield and production prospects for both corn and soybeans. Best prospects for rain ahead of next week’s temperature blast are in SE corn belt with a system moving south thru KY and TX today, along with scattered rains favoring Western KS and parts of NE and central MO. The corn balance sheet has more wiggle room for reduced yields with planted acres just over 94 mil., a 10 year high, and weak export demand. The average US yield would have to fall below 165 bpa (177.5 current) for stocks/use to fall below 8.3%, a decade low, assuming no change in demand. US corn remains $.20 – $.50 over SA supplies thru Oct-23. Export sales tomorrow are expected to range from 20 – 40 mil. bu. Ethanol production jumped to 1,070 tbd last week, the highest since Dec-22 and above expectations. Production was above the pace needed to reach the USDA corn usage forecast for the 1st time since Feb-22. Recall the USDA lowered this forecast 25 mil. bu. last week to 5.225 bil. Overall implied gasoline demand was up 1% from last week at 8.855 mbd, and up 3.9% YOY. Algeria bought an undisclosed amount of feed grade corn from SA near $250/mt CF. O.I. in corn yesterday was actually up 2,651 contracts, suggesting some new buyers in the market, not just short covering from speculative traders. AgroConsults is forecasting 2nd crop corn production in Brazil will reach 107 mmt, well above the recent Conab est. of 98 mmt. This would imply total corn production of nearly 137 mmt, above the Conab forecast of 127.7 mmt and the USDA’s 133 mmt. Their corn export forecast however is only 54.1 mmt, below the USDA est. of 56 mmt.
WHEAT
Prices were sharply higher across all 3 classes as both Chicago and KC briefly traded up their daily limit of $.60 before drifting back. Chicago closed $.50 – $.55 higher, KC was $.38 – $.40 higher, while MGEX was up $.18 – $.20. Fund short covering adding war premium dominated trade in CGO wheat as weather has little to no impact on supply with SRW harvest essentially complete. For a 2nd consecutive night Russia attacked the port city of Odesa with both missile and drone strikes damaging loading equipment and grain storage facilities. The port city of Chornomorsk also suffered infrastructure damage. Explosions also tore thru a Russian military base in Crimea. Estimates place grain losses from missile attacks in Odesa at 60k mt. OI yesterday was down 1,700 in Chicago, however KC was up 1,148 contracts. Limit up trade in Dec-23 KC took prices to a 5 month high before drifting back a bit. After surging to an 8 month high, MGEX Dec-23 traded backed to support, now at $9.05. Russia has reportedly given the UN a 3 month ultimatum to meet their terms in order to resume Ukrainian ag. shipments thru the Black Sea. Export sales tomorrow expected to range from 8 – 18 mil. bu.
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