Wheat complex extends losses
Soybeans were lower on fund and technical selling. Planting and development weather looks generally favorable in much of the Midwest and Plains. Weekly old crop export numbers were bearish. Old crop sales were just 600,000 bushels, sharply lower than last week, mainly to Mexico and unknown destinations, with a big cancellation by China. New crop sales were somewhat better at 24.4 million bushels, primarily to unknown and China. Soybean meal was lower and bean oil was higher adjusting spreads. Soybean oil is also oversold after the recent move to two-year lows, helping it shrug off the drop in crude oil and the recent trend in global vegetable oils. The International Grains Council now sees 2023/24 world soybean production at 403 million tons, up 2 million from April, with the 2022/23 guess also up on the month because of the record crop in Brazil. The USDA’s next set of supply, demand, and production numbers is out June 9th.
Corn was mixed on bear spreading, pressuring nearby months, and supporting deferred contracts. Corn is watching planting and development weather, including rain in dry parts of the U.S. Plains. Old crop exports were a marketing year low at -13.3 million bushels following a big cancellation by China. New crop sales were shy of 3 million bushels, mostly to Mexico. The recent cancellations by China can be linked to expectations for a record second crop in Brazil, with harvest getting underway this summer. There are some concerns about dry weather in parts of Brazil, but for now, it’s record large. The International Grains Council sees 2023/24 world corn production at 1.217 billion tons, compared to 1.208 billion a month ago and the anticipated 2022/23 total of 1.153 billion tons. The U.S. Energy Information Administration will start including ethanol exports in its weekly numbers starting June 1st.
The wheat complex was sharply lower on fund and technical selling, along with the strength in the U.S. dollar. The continued decline comes despite the low hard red winter yields and high rates of abandonment reported in the central and southern Plains. That’s largely factored into the market at this time. Soft red winter is in comparatively good condition and hard red spring planting conditions are expected to improve. Old crop export sales were a marketing year low at -1.5 million bushels after a handful of cancellations, but the new crop numbers were decent at 12.4 million bushels, with the Philippines and unknown leading the way. The 2023/24 marketing year for U.S. wheat starts June 1st. For 2023/24 globally, the International Grains Council sees production at 783 million tons, which would be down 4 million from last month’s guess and 20 million under 2022/23, anticipating smaller crops in a few countries, including Russia and Ukraine. The two-month extension of the Black Sea Grain Initiative was confirmed by Russia Thursday. Additional pressure came from reports of U.S. wheat imports for feed use.