Soybeans, corn, wheat drop on broader market
Soybeans was sharply lower on fund and technical selling, in addition to spillover from crude oil and the dollar. The USDA did lower the production estimate following the acreage totals, while new crop ending stocks were larger than expected. Old crop ending stocks, or new crop beginning stocks were up from June, but the USDA did cut new crop crush and export projections, along with the average estimated farm price. Globally, old crop ending stocks were higher, but new crop stocks and production were lower. That decline in production was due to the lower U.S. estimate, with no changes for South America. 2022/23 imports by China were down on the month. Lingering in the background are weather concerns for U.S. production, with dry weather expected to persist in some areas into August, a key development period for soybeans. Soybean meal and oil futures fell on the general bearishness in grains and oilseeds. ABIOVE pegs Brazil’s 2022 soybean crop at 125.79 million tons, slightly above a month ago, with exports projected at 76.8 million tons. Those losses in the broader market were linked to concerns about recessionary signals.
Corn was sharply lower on fund and technical selling, along with spillover from the broader market. The U.S. production and ending stocks were up on the month, but lower than expected. The only real changes on the new crop side of the domestic ledger were the higher production and beginning stocks numbers, with no changes to ethanol use or exports. Globally, new crop ending stocks were up with higher beginning stocks and a slight increase for world production. The USDA did lower the crop production guess for Russia, but left Ukraine unchanged. The trade is also watching development conditions as the crop moves into and through key development phases. The short-term weather outlooks generally have mixed precipitation, but that was not enough to break the spillover pressure from the outside markets. The U.S. Energy Information Administration’s weekly ethanol production and stocks numbers are out Wednesday.
The wheat complex was sharply lower on fund and technical selling, in addition to the strength in the U.S. dollar. U.S. and world old and new crop ending stocks were above a month ago, and domestic production was also up on the month. That really just confirms a lot of the bearish sentiment related to the market and this round of numbers also reflected the uncertainties connected to Ukrainian production and exports following the invasion by Russia. On the domestic side of things, the USDA raised old crop ending stocks and exports, while increasing new crop production and exports and cutting the average estimated farm price. For the new crop world numbers, ending stocks and beginning stocks were above a month ago, but production was down modestly. The USDA lowered the production outlooks for Argentina, the European Union, and Ukraine, while raising expectations, slightly, for Canada and Russia. The next set of supply, demand, and production numbers is out August 12th. SovEcon says Russia’s wheat exports are ahead of expectations. Moscow denies stealing and selling grain from Ukraine, even as Russian troops burn Ukrainian fields after destroying significant export infrastructure on the Black Sea. Russia, Ukraine, the U.N., and Turkey are expected to talk Ukrainian exports this week. The chance of Russia opening up a Black Sea export corridor for Ukraine remains slim.