Wheat gains on weather concerns
Soybeans were mixed Friday, still ending the week with strong gains. Soybeans adjusted spreads while watching development weather, with drought impacting nearly 60% of U.S. bean acreage. Near-term forecasts generally have scattered rain with high temperatures in some areas. There was some initial support tied to follow through buying from Thursday, but that evaporated as soybean and crude oils sold off, giving way to periodic bear spreading and profit taking. The slow export demand for U.S. beans continues to drag on the market, limiting some of the effects of these weather concerns. Still, it’s likely the USDA’s record soybean yield projection will be trimmed as development moves ahead, unless there’s a significant, unexpected, shift in the weather pattern. Either way, for now, Brazil holds the lion’s share of the soybean export market. In an early projection, Safras e Mercado sees Brazil’s 2023/24 crop at 163.2 million tons. Stateside, the NOPA expects the June soybean crush by members to be 170.568 million bushels, which would be down from May due to seasonal maintenance.
Corn was higher on fund and technical buying, adding to what already would have been a higher weekly finish. 64% of U.S. corn acres are impacted by some form of drought, throwing the USDA’s record production guess into question. The USDA did lower the yield estimate in the most recent supply and demand report and that number could come down further if there’s not widespread relief. That next round of numbers is out August 11th. Any major upside will be limited by slow export demand. Brazil continues to dominate that market as well. The harvest of Brazil’s expected record second crop is ongoing. CONAB raised its 2022/23 production guess in its most recent set of numbers, while Safras e Mercado is already projecting the 2023/24 crop at a record 137.4 million tons. The Buenos Aires Grain Exchange says 58% of Argentina’s corn crop is harvested with production at 34 million tons.
The wheat complex was higher on fund and technical buying, adding to the weekly gain in Minneapolis and pulling Chicago and Kansas City into positive territory. Forecasts for much of the northern Plains and Canada into late July are mostly dry, stressing spring wheat. Conditions are already generally pretty poor in some of the key spring wheat growing areas and this pattern is just expected to add to those extant woes. Chicago and Kansas City are monitoring winter wheat harvest activity, with rain delays and quality concerns in parts of those regions. The trade is waiting to see if the Black Sea Grain Initiative is extended this coming week. Publicly, Russia’s stance is against an extension of the pact with Ukraine, but that was also the sentiment the last time the deal was extended in May. The Buenos Aires Grain Exchange left its planted area estimate for Argentina unchanged on the month.