Written Commentary
SOYBEANS
The soybean complex was sharply lower across the board with soybeans down $.25 – $.40, soybean meal down $6 – $8, while soybean oil was 90 – 150 lower. July-23 beans violated 100 day MA support at $14.43 ½ before recovering into the close. Nov-23 soybeans traded at a new 2 week low with next support at $12.54, a 50% retracement from the May low to the June high. The July/Nov spread slipped another $.15 to $1.86, down $.32 from yesterday’s peak. After trading to the highest level in nearly 4 months, spot bean oil has turned lower. Stats Canada reports canola plantings rose 500k acres from Spring intentions to 22.1 mil., slightly above trade estimates. Our June 1st US stocks est. at 790 mil. bu. is down from 968 mil. YA and just below the average trade est. of 805 mil. Our acreage forecast at 87.7 mil. acres is up 200,000 from the Mch-23 intentions and in line with the average trade est. Brazil expects June soybean exports will reach a record 14.2 mmt, however this forecast is down .1 mmt from their previous est. History shows the odds of a bullish or bearish report on Friday are equally balanced. Since 2000 Nov. soybeans have closed higher on report day 52% of the time, while closing lower 48%. A week after the report the odds shift a bit bullish with Nov beans being higher 61% of the years. The largest 1 week move was in 2017 with nearly a 10% gain, while the largest decline was 9% in 2009. Export sales tomorrow are expected to range from 8 – 26 mil. bu. for soybeans, 100 – 450k tons soybean meal, and 0 – 15k tons soybean oil.
CORN
Prices were down $.24 – $.33 with spot July-23 leading today losses. Prices continue to shed weather premium despite much of the Midwest having received less than half of its normal precipitation over the last 60 days. Markets are placing a high level of confidence in the upcoming weather pattern change significantly improving crop prospects, and/or placing a low level of confidence in the current USDA usage forecasts. 100+ degree temperatures are expected to push north from Texas and the gulf coast as far north as KS, MO, and Southern IL by Thur/Fri. before moderate cooling over the weekend. 7 day rainfall totals still expected to reach 1.25-2.5” over a large portion of the central Midwest. Much lesser amounts across the northern plains and southwest. Both the NWS 6-10 and 8-14 day forecasts offer above normal precipitation for much of the continental US. July triggered a number of sell stops upon trading below $6.00, driving prices down to a test of the monthly low at $5.81 ¼. Dec-23 corn violated both its 100 and 50 day MA’s while coming within $.01 of closing a gap on the charts at $5.33. The USDA did announce the sale of 171k tons (7 mil. bu.) to Mexico. 1 mil. bu. was for 2022/23 MY, with 6 mil. for new crop. Ethanol production held steady last week at 1.052 tbd, slightly above expectations, however slightly below the pace needed to reach the current USDA corn usage forecast of 5.250 bil. bu. Ethanol stocks ticked up a touch to 23.0 mb. Implied gasoline usage last week was down 1% from the previous week, however was up 4% from same week YA. Our June 1st stocks est. of 4.271 bil. bu. is down from 4.349 bil. YA, however just above the average trade est. of 4.250 bil. Our acreage forecast at 91.9 mil. acres is down 100k from the Mch-23 intentions and in line with the average trade est. History shows the odds are tilted slightly toward a bearish report on Friday. Since 2000 Dec corn has closed higher on report day 35% of the time, while closing lower 61%. (1 year was unchanged) A week after the report the odds shift a bit more neutral with Dec corn being lower 57% of the years. The largest 1 week move was in 2010 with just over a 13% gain, while the largest decline was 15.5% in 2009. Export sales tomorrow are expected to range from 5 – 24 mil. bu. Stats Canada showed oat acres at 2.537 mil. were below expectations of 2.9 mil. APK Inform Group forecasts Ukraine’s 2023 corn production will reach 23.8 mmt, just below the USDA forecast of 24.5 mmt and down from 27 mmt YA.
WHEAT
Prices were sharply lower across all 3 classes with Chicago and MGEX $.26 – $.30 lower, while KC was down $.32 – $.37. July-23 Chicago violated support at its 100 day MA, next support is the 50 day MA at $6.46. July-23 KC has violated support at both its 50 and 100 day MA’s, while also dipping below $8.00 intraday. Stats Canada forecasts all wheat acres at just below 27 mil. acres, above expectations of 26.5 mil. APK Inform Group forecasts Ukraine’s 2023 wheat production will reach 16.1 mmt, below the USDA est. of 17.5 mmt and down from 20.9 mmt YA. While India’s monsoon so far has been delayed, it is forecast to cover the entire country within the next 2-3 days according to the India Meteorological Dept., roughly 1 week earlier than normal. The govt. has been forecasting rainfall will average 96% of normal over this year’s monsoonal period that stretches from June thru Sept. History shows the odds of a bullish or bearish report on Friday are mostly balanced. Since 2000 Dec Chicago wheat has closed higher on report day 43% of the time, while closing lower 52%. (1 year was unchanged) A week after the report the odds shift to being higher 52% of the years. The largest 1 week move was in 2010 with just over a 15% gain, while the largest decline was 10% in 2000. Export sales tomorrow are expected to range from 4 – 14 mil. bu.
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