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Ag Market View for July 13.23


The soybean complex was higher across the board with beans up $.38 – $.43 closing near session highs, meal was up $9 – $12, while soybean oil was 135 – 190 higher.  Nov-23 beans held a test of yesterday’s low in overnight trade, rebounding to recover all of yesterday’s losses however was limited to an inside trading session.  There is a lot of weather to go thru yet before we can achieve the USDA yield forecast of 52 bpa.  57% of the US soybean crop is in drought, down another 3% from last week and down from the recent peak of 63%.  Custom data overnight showed China imported 10.3 mmt in June, down 15% from May, however up 25% from June-22.  YTD their imports at 52.6 mmt are up 13.6% from YA, vs. the revised USDA forecast of up 8.1%.  Yesterday the USDA raised their 2022/23 Chinese import forecast 1 mmt to 99 mmt.  Exports are expected to slow as they transition to buying US soybeans.  The pace will need to slow or face higher import forecast.  US export sales were weak at only 11 mil. bu., however the USDA also announced the sale of 316k tons (11.5 mil. bu.) of new crop soybeans to Mexico.  Old crop commitments are down 11% from YA, vs. the revised USDA forecast of down 8%.  New crop commitments are historically low at only 153 mil. (509 mil. YA), however I expect sales will start to accelerate.  Additional cancellations of soybean oil receipts have helped fuel today’s price surge.  Conab lowered their Brazilian production est. 1.2 mmt to 154.5 mmt, vs. the USDA’s forecast of 156 mmt.  The Rosario Grain Exchange lowered their 2022/23 Argentine prod.  forecast .5 mmt to 20 mmt, well below the USDA est. of 25 mmt.  The USDA continues to project a large increase in global production and stocks among soybean exporters in 2023/24.  Long way before this can be realized.  As evident from the RGE and USDA est. they can’t even agree on this year’s harvest size.  Look for soybeans to continue being the leader in the ag space. 



Prices closed $.14 – $.16 higher, also finishing near session highs after a lower start overnight.   Supporting prices are concerning longer range forecasts, signs of improved export demand, and further weakness in the US $$$.  Good rains in the past 24 hours across much of IA, MO, southern WI, northern IL and MI.  Rains the next 5-7 days are expected to be heaviest across the southern Midwest further reducing drought conditions in much of the nation’s midsection.  Still too dry across the northern plains and NC Midwest with extended forecasts showing the potential for a high pressure ridge preventing moisture from reaching these areas.  Look for drought conditions to deepen across the NC Midwest and Canadian prairies.  Dec-23 managed to close back above the $5 level while recovering all of yesterday losses.  Export sales at 37 mil. bu. (1/2 old crop, ½ new) were above expectations.  Old crop sales were the highest in 13 week and bring YTD commitments to 1.555 bil. bu., still down 35% from YA, vs. the revised USDA forecast of down 33%.  New crop commitments have reached 159 mil., still the lowest since 2019 and down from 269 mil. YA.  64% of the crop is in drought, down 3% from LW and below the recent peak of 70%.  Conab increased their Brazilian production forecast 2 mmt to 127.7 mmt, still well below the revised USDA est. of 132 mmt.  Their export forecast at only 48 mmt is also well below the USDA’s 55 mmt.  Strategie Grains lowered their EU production forecast .4 mmt to 60.8 mmt, well below the USDA’s forecast of 64 mmt.  Upside price potential for Dec-23 above $5 is likely limited unless new crop soybeans are surging above $14.  Stocks/use ratio among the top 4 corn exporters is forecast to increase for the 3rd consecutive year in 2023/24 to nearly 12%, the highest in 5 years.   


Prices were higher across all 3 classes in choppy 2 sided trade.  MGEX and Chicago were both $.07 – $.08 higher, while KC was $.03 – $.05 better.  Look for Dec23 MGEX to challenge last month’s high near $9.00 as we look for production to slip in subsequent USDA reports.  Winter wheat areas in drought fell 2% LW to 52%, while spring wheat areas in drought jumped 6% to 25%.  Look for this trend to continue.  Conab raised their Brazilian production forecast .7 mmt to 10.4 mmt , very near the USDA est. of 10 mmt.  US export sales at 15 mil. bu. were at the high end of expectations and bring YTD commitments to 184 mil. bu., still down 29% from YA, vs. the USDA forecast of down 4.5%.  In an effort to persuade Russia to extend the BSGI, the UN and EU are considering a plan to allow a subsidiary of Russia’s state ag. bank access to the SWIFT global financial system.  Sounds like longshot but you never know.  Global wheat production and stocks/use among global wheat exporters is expected to fall to a multiyear low in 2023/24 likely keeping downside below recent lows limited.


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