Written Commentary
SOYBEANS
Soybeans ended lower. List of new negative news is growing. First most now agree with USDA and Pro Farmer that US 2022 soybean crop could be record high. Second both EU and GFS weather models suggest US Midwest will see some showers over the next 2 weeks adding bushels to the best crop. Central Bank hell bent policy to raise US interest rates the rest of this year and all of 2023 is bullish the Dollar and negative commodities. Third, some are already forecasting record South America 2023 soybean crops. Lastly, China demand for US soybean could slow early in 2023 if SA has record crops and China demand drops as fast as their economy. Soyoil is on the defensive as World vegoil prices are lower led by palmoil and RSO.
CORN
Corn futures were lower. US Dollar has found a new 20 year high. Higher Dollar gives competing exports an advantage over US export prices. Crude is lower. Managed funds were net sellers of 8,000 corn. We now estimate Managed funds to be net long 147,000 corn. Some note that there is new concern that 14 year high in EU Nat gas prices could reduce discretionary spending there. Central Bank war on inflation, no matter what, could lead to lower food and feed demand and lower prices. Ukraine corn is a steep
discount to US. Russia Sep wheat prices are a discount to US gulf corn. Lack of USDA US export sales leaves traders in the dark on trying to gauge US exports or lack of. USDA FAS will release export sales Sep 15. Midday US weather maps have put 2.00-7.00 inch rains N TX, OK, E KS, W IA Sep 8-10. At times corn futures trend higher due to tight US domestic supplies and talk of lower US 2022 crop vs USDA August estimate.
WHEAT
Markets appear to be in full risk-off mode with the macros have turning increasingly negative for commodities, crude falls to 2-week lows on Chinese lockdowns, and Ag demand recedes as consumers try to go more hand-to-mouth. GASC reportedly negotiating today for another private wheat deal. Word is they bought Russia. The world wheat price barometer which GASC tenders represented for years, appears to have finally come to an end. Matif futures fell following US markets. German/Baltic wheat spreads are widening and Black Sea spreads are even wider with 12.5 pro at $315, feed at $275 (against corn at $265). Russia Sep wheat $27 dollar discount to US gulf corn. Ukraine’s Agrarian Council argued for a 30-40% drop in winter acres and a max 15 mmt crop in 2023 vs 18.6 ly and 25 prewar. US Dollar at new 20 year high is not helping US commodities especially wheat.
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