Corn holds onto gains as soybeans, wheat fail to rally
Soybeans were lower on fund and technical selling. Beans did try to rally but bowed to another round of pressure from vegetable oils, crude oil, and general demand concerns. Soybean oil dropped on those demand concerns and while nearby crude oil was down during the normal grain and oilseed session, it did show some signs of firming up after the CBOT close before eventually closing lower. Soybean meal did close mostly higher on spread trade. Old crop export sales were a marketing year low for the fourth consecutive week and a net reduction for the third week in a row, following cancellations by unknown destinations and China. That’s due to a few different factors, including less expensive supplies from Brazil and relative strength in the dollar. New crop sales fell short of 115,000 tons, with 90,000 tons of the total to China. More purchases could be canceled by Beijing with another round of reports of COVID lockdowns in the world’s largest soybean importer. Still, even if there are uncertainties about global demand, domestic crush margins and the cash basis in parts of the Midwest are strong.
Corn was modestly higher on fund and technical buying. Most forecasts have hot, dry weather in much of the region over the next two weeks, stressing the crop. The USDA’s next round of supply, demand, and production numbers is out August 12th, which will include a state-by-state yield forecast. Gains were limited by slower demand, with old crop export sales below average, but avoiding a new marketing year low. Unknown destinations canceled on old crop last week, while the big buyer for both old and new crop corn was Japan. The new marketing year for corn, and soybeans, starts September 1st. Strategie Grains sees the 2022 European Union corn crop at 65.4 million tons, 1.4 million less than last month because of weather and, if realized, 4.3 million below the 2021 total. Brazil’s second corn crop harvest is ongoing. The Rosario Grain Exchange says Argentina’s corn crop should total 51 million tons, 800,000 above the prior guess, despite dry conditions in some key growing areas. The Buenos Aires Grain Exchange says less than 60% of that crop has been harvested, compared to the five-year average of 70%.
The wheat complex was lower on fund and technical selling. Wheat was up early, but unable to follow through due to slow demand and the recent relative strength in the dollar. The trade was waiting for reports on developments from this week’s meeting on Ukraine’s exports also involving the U.S., Russia, and Turkey. There were reports after the session that a deal will be signed next week, but no official confirmation by any party to the talks. If a deal is actually reached, and Russia actually holds to the terms, it would likely lead to at least some increase in available wheat on the global market. Russia continues to attack Ukraine and has destroyed fields in Ukraine, while allegedly selling stolen Ukrainian grain. IKAR estimates Russia’s wheat crop at a record 90.5 million tons, with potential exports of 44 million tons, up from previous expectations. Strategie Grains projects the 2022 European Union soft wheat crop at 123.3 million tons, a decline of 1.1 million on the month and 6.6 million on the year. China’s National Statistics Bureau has the summer wheat crop at 135.76 million tons, 1% above 2021 thanks to a slight increase in planted area and a better yield. The trade is also watching dry weather potentially impacting planted area in Argentina. The Rosario Grain Exchange currently sees the crop at 17.7 million tons, compared to the last guess of 18.5 million, due to those uncertainties about planted area. The Buenos Aires Grain Exchange says 18% of Argentina’s wheat crop is in good to excellent shape, 3% less than last week. U.S. wheat export sales topped a million tons, with about a quarter of the total purchased by China, fulfilling some of the recent trade rumors. There was even 30,000 tons sold to Brazil for 2023/24 delivery.