Market News
Weather forecasts fuel gains in corn, soybeans, wheat
Soybeans were sharply higher on fund and technical buying. Near-term forecasts have more rain in dry portions of the region this week ahead of an expected generally warmer and drier pattern, further impacting those areas that have already been hit hard by drought or near drought conditions. The worst conditions are in the northern and northwestern U.S. Plains. Indigo lowered their outlook to 4.32 billion bushels with an average yield of 49.8 bushels per acre, compared to the most recent USDA guesses of 4.41 billion bushels and 50.8 bushels per acre. Any issue with this year’s crop will have a big impact on supply and prices. The USDA left old and new crop ending stocks projections unchanged earlier this week, with both seen as historically tight. That’s including the 2021/22 marketing year, which doesn’t end until August 31st, 2022. The USDA’s next set of supply and demand estimates, first survey-based crop production estimate of the season is out August 12th. China reportedly bought soybeans from Brazil, but there’s been no confirmation. The U.S. premium to Brazil is narrowing, but Brazil continues to have an advantage into August. The USDA’s weekly sales numbers are out Thursday morning. Soybean meal and oil were supported by the strength in beans and the fundamental implications of a smaller than expected soybean crop. Bean oil gained despite some profit taking in global vegetable oils.
Corn was higher on fund and technical buying, with most months posting double digit gains. Corn is also watching the weather with potential stress while the crop is in key development phases. Similar to beans, there’s not a lot of wiggle room for corn this marketing year or next marketing year because of the tight supply projections. Indigo has the crop at 14.61 billion bushels with an average yield of 172.9 bushels per acre, compared to the most recent USDA projections of 15.17 billion business and 179.5 bushels per acre. Conditions are mostly expected to be more favorable for eastern growing areas than for western growing areas. Rabobank is projecting Brazil’s new crop exports at 21 million tons, which would be 12 million less than old crop because of the weather issues with their critical second crop. Ethanol futures were unchanged. The U.S. Energy Information Administration says ethanol production last week averaged 1.041 million barrels a day, down 26,000 on the week, but up 110,000 on the year, while stocks of 21.134 million barrels were 15,000 less than the previous week, but 526,000 above a year ago. July grain and oilseed contracts have expired.
The wheat complex was higher on fund and technical buying. Parts of the spring wheat region have seen some rain ahead of that return to hot, dry weather, with continued concerns about higher-than-normal rates of abandonment for this year’s spring wheat crop. That’s also affecting Canada’s spring wheat crop, while Russian winter wheat yields have been lower than expected. SovEcon lowered their production estimate this week and Russia’s Ag Ministry says just 8.1 million tons of wheat have been collected to so far, compared to 18.1 million a year ago, with an average yield of 3.28 tons per hectare, compared to 3.37 this time last year. For U.S. winter wheat, hard and soft red harvests are ongoing, with quality concerns in some areas, and the same issues that are affecting the spring wheat crop in the northern and northwestern U.S. Plains are also having an impact on white winter wheat. China’s Bureau of Statistics says 2021 winter wheat production was 134 million tons, up 2% on the year thanks to higher planted area and yield. The USDA’s attaché in Kazakhstan estimates 2020/21 wheat production at 13.2 million tons, compared to the official guess of 14.256 million tons due to hot, dry weather during portions of the planting season. 2021/22 production is seen at 13.2 million tons, compared to the official estimate of 14 million. Exports this marketing year are pegged at 7.3 million tons with next marketing year at 7.7 million, 200,000 and 300,000 tons, respectively, under the official expectations. Egypt reportedly bought 180,000 tons of wheat from Romania.
