Written Commentary
SOYBEANS
Soybeans ended higher. Some link the bounce to short covering. US domestic soybean crush demand remain strong with overnight board crush margins testing 200. Cash margins are even higher. Over the next 10 days most of China will see a heat wave. USDA estimated that 26 pct of US soybean crop is in drought vs 11 last month. World Oct-June soybean plus soymeal exports are near 126.1 mmt SBME vs 130.4 ly. USDA Oct-Sep goal is 172.3 versus 175.4. This will be the first year in which total trade will drop below the previous year. USDA est US Oct-Sep Soybean exports at 59.0 vs 61.7 ly, Brazil 81.0 vs 81.6 and Argentina 2.2 vs 5.2 ly. USDA est US Oct-Sep soymeal exports at 12.4 mmt vs 12.5 ly, Brazil 18.5 vs 16.6 and Argentina 28.3 vs 28.3 ly.
CORN
Corn futures ended lower. Signing of a deal between Russia and Ukraine with the UN trying to open Ukraine exports weighed on futures. USDA estimates that 29 pct of US corn crop is in drought vs 19 last month. 80 pct of sorghum is in drought vs 77 last month. 59 pct of cattle feed lots are in drought vs 48 last month. Over the next 14 days, 30 pct of Midwest will get .50 inches of rain, 40 pct 1.00 inches and 30 pct will get over 1.50 inches. Normal weekly Midwest rainfall is 1.50 inches per week. Most of E NE, KS, OK, TX, MO, AR and EC IN has seen less than normal rains so far in July. The deal targets the pre-war level of 5 million metric tonnes exported each month by Ukraine. The deal is valid for 120 days and the UN expects it to be renewed unless the war has ended by then. The deal ensures safe passage in and out of Odesa and two other Ukrainian ports in what the official called a “de facto ceasefire” for the ships and facilities covered. This deal is a huge leap of faith. The Russians and Ukrainians did not sit at the same table today, and they did not sign the same document. They reportedly signed separate documents with mirror agreements. The most recent vessel loaded was 7,000 tonnes and elevator unloaded 60 tonnes per day by truck to load the boat. USDA also est Ukraine 2022/23 corn exports at 9.0 mmt vs 24.0 ly. Will see how markets react if Ukraine total grain exports are not near 5.0 mmt monthly over the next 3 months. A few crop/weather watchers are concerned FH July hot US Midwest weather may drop US corn yield below USDA 177 despite next weeks rains.
WHEAT
Wheat futures ended sharply lower after UN, Russia and Ukraine signed a deal that could open Ukraine exports. The deal targets the pre-war level of 5 million metric tonnes exported each month by Ukraine. The deal is valid for 120 days and the UN expects it to be renewed unless the war has ended by then. Work is to get underway immediately to establish inspection teams and staffing a Joint Coordination Center (JCC) in Istanbul overseen by members of all four parties to the agreement. The deal ensures safe passage in and out of Odesa and two other Ukrainian ports in what the official called a “de facto ceasefire” for the ships and facilities covered. This deal is a huge leap of faith. The Russians and Ukrainians did not sit at the same table today, and they did not sign the same document. They reportedly signed separate documents with mirror agreements. USDA est Ukraine 2022/23 wheat exports at 10.0 mmt vs 18.8 ly. Will see how markets react if Ukraine total grain exports are not near 5.0 mmt monthly over the next 3 months.
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