Soybeans, wheat drop to start July

Market News

Soybeans, wheat drop to start July

Soybeans were sharply lower on fund and technical selling, pushing contracts to a lower weekly finish. The USDA’s stocks and acreage numbers were nominally bullish, but not enough to sustain a rally Thursday, with rain in many near-term forecasts. There have been no deliveries against July soybean or soybean product contracts. Soybean products also dropped on the bearishness in beans, even as crush margins remain solid. The USDA says 181 million bushels of soybeans were crushed during May 2022, unchanged from April and up 7 million from May 2021. Export demand’s a question mark. Old and new crop sales and shipments are running ahead of expectations, but demand from China has dropped off due to COVID lockdown concerns and the increasing availability of beans from Brazil. China reportedly bought beans from Brazil this past week. Ukraine’s Institute of Agrarian Economics estimates 2022 sunflower seed production at 7.9 million to 8.8 million tons, well below the 14.9 million production in 2021, enough to meet domestic needs. Exports are a concern due to the logistics issues created by Russia’s invasion. About 500,000 tons of sunflower oil is reportedly blocked at Ukrainian ports.

Corn was mostly lower, ending the week with big losses. Corn is also watching the weather and those chances for rainfall in the coming week balancing out some of the concerns about high temperatures as the crop moves into and through key development phases. The July contract was the exception, with no deliveries reported. Domestic demand continues to be strong. The USDA says corn for ethanol use during May was 446.149 million bushels, up 7% on the month, but down less than 1% on the year, with similar results for DDGS production. The European Commission sees 2022/23 corn production inside the bloc at 71.7 million tons, compared to the previous estimate of 72.5 million, with imports of 15 million tons, 2 million more than the prior guess, but 1.5 million less than last marketing year. Second crop corn harvest is ongoing in Brazil, with CONAB’s updated outlook scheduled for the 7th. 46.5% of Argentina’s corn crop is harvested. Markets are closed Monday for July 4th.

The wheat complex was sharply lower on fund and technical selling, with the most active months losing some significant ground. Wheat is heavily oversold, but demand continues to be slow, even with competitive prices. Weather looks good for U.S. winter wheat harvest activity and recent rain in the northern U.S. Plains and Canada has helped boost spring wheat production prospects. Statistics Canada will issue planted area totals for that nation on the 5th and the USDA’s next round of supply, demand, and production estimates is out on the 12th. Deliveries against July Kansas City have been light, heavier against July Chicago, and non-existent for July Minneapolis. The European Commission pegs 2022/23 soft wheat production at 125 million tons, a drop of 5.4 million on the month due to lower yields in France, Poland, Romania, and Spain, but left exports at a record 38 million tons, anticipating stronger demand due to the impact of Russia’s invasion of Ukraine on the market. France’s AgriMer says 5% of that nation’s soft wheat crop has been harvested, with 64% rated good to excellent. Protein content is reportedly near average. Winter wheat harvest activity is underway in Ukraine. The likelihood of Russia allowing an export corridor for Ukraine continue to dwindle following another round of attacks by Moscow. 73.5% of Argentina’s wheat crop is planted.