Soybeans, corn dive on rain potential
Soybeans were sharply lower on speculative and technical selling. The USDA’s national good to excellent rating declined to 51%, but beans have more time to bounce back than corn, with August the key month for beans. The ongoing El Nino pattern typically, but not always, leads to a wetter weather pattern in some currently very dry U.S. growing areas. It’s unlikely the USDA will make significant adjustments to yield projections until September. The next set of supply, demand, and production numbers is out July 12th, with the most likely potential revision in this round of numbers to exports because of Brazil’s dominance. If there is a change to production, it’ll be related to acreage, with the USDA’s 2023 planted area totals set to be released this Friday, along with quarterly grain stocks numbers. While near-term supplies are tight, demand is slow and beans are overbought. Soybean meal was lower and bean oil was higher on the adjustment of product spreads.
Corn was sharply lower on speculative and technical selling. The good to excellent rating on corn is the lowest for late June in a number of years. The most recent rating is comparable to some other years that were hit by drought, including 1988. However, there could be relief on the horizon, with some forecasts showing a wetter pattern over the next two weeks, especially in areas missed by last weekend’s precipitation. Still, previously forecasted rain has not actually materialized in some of the drier parts of the Midwest and Plains this growing season and some areas have seen crop damage from severe storms accompanying that rainfall. AgRural says 9.3% of Brazil’s second corn crop is harvested, compared to 20.3% a year ago. AgRural pegs that second crop at 97.9 million tons with total production for Brazil at 127.4 million tons. CONAB’s updated outlook for Brazilian crop production is set for July 13th. The U.S. Energy Information Administration’s weekly U.S. ethanol numbers are out Wednesday.
The wheat complex was sharply lower on fund and technical selling. Slow export demand continues to be the biggest bearish factor for wheat, canceling out some of the weather-related concerns. The USDA’s spring wheat condition rating was down on the week, but that was prior to some rain in the northern U.S. Plains and Canada, and while the winter wheat harvest is slower than average, it should pick up steam soon. The trade is monitoring the rates of hard red winter abandonment because of the widespread drought conditions in the central and southern U.S. Plains. Parts of that region have seen some improvement and while it’s too late for this year, if the pattern continues, it could improve things for next year’s crop. The European Union’s crop agency MARS estimates Russia’s 2023 wheat crop at 86.7 million tons, 17% less than last year’s record, but above average. Russia continues to control the global wheat market. Ukraine’s Sea Port Authority is emphasizing Kyiv’s need to use Danube River ports because of Russia’s tacit blockade of the Black Sea.