Wheat falls on Ukraine/Russia export deal
Soybeans were higher on commercial and technical buying but closed lower on the week. Most forecasts had a more moderate short-term weather outlook, but there are concerns about conditions in August, the critical month for beans. Some weather models even show expanding drought conditions in the Midwest through October. Any extended period of dryness could hamper yield and would necessitate a much wetter fall and winter to help set up spring planting. Contracts were oversold and there was spillover from bean oil, which popped higher following Canadian canola, shrugging off lower moves in crude oil and palm oil. Those losses in palm oil were linked to Indonesia’s efforts to get rid of excess supplies following larger than expected production.
Corn was lower on fund and technical selling, cementing the sharply lower weekly finish. Corn was also watching the weather, with many forecasts showing cooler temperatures and improved rain in parts of the region in the coming week. Still, after that, the forecasts are a little dicey, which could impact pollination of later planted crops. Domestic demand for U.S. corn continues to be solid, especially when compared to the slowdown in export demand. The trade is monitoring harvest activity in South America and weather in Europe, along with the resumption of grain exports through the Black Sea by Ukraine. The Buenos Aires Grain Exchange says 67% of their corn crop is harvested and Brazil’s second crop harvest is ongoing. France’s AgriMer says 75% of that nation’s corn crop is in good to excellent condition, a drop of 8% on the week and 15% on the year due to the hot, dry weather impacting parts of Europe.
The wheat complex was sharply lower on fund and technical selling, pulling contracts to weekly losses. A deal brokered by the United Nations was reached to allow Ukraine to export grain and Russia to export fertilizer through the Black Sea. Still, this agreement will likely be contingent on several factors, especially insurance for those vessels and Russia sticking to their end of the deal, even as Moscow continues to attack Ukraine, including port and ag infrastructure. Turkey played a large role in the talks and is expected to do third party inspections of vessels. Egypt bought 120,000 tons of wheat from Russia and the European Union, pushing their total for the week to 760,000 tons, while Pakistan is in the market for another 200,000 tons of wheat from Russia, after buying 500,000 tons earlier in the week. A major spring wheat crop tour gets underway in the coming week. The U.S. crop is in much better shape than this time last year thanks to improved rainfall in parts of the northern Plains. Canada’s spring crop has also likely benefited from improved precipitation in parts of their growing region. The USDA’s attaché in Indian estimates 2022/23 wheat production at 99 million tons, unchanged from the department’s last guess, but below the official USDA estimate of 106 million and the 2021/22 total of 109.586 million. Exports this marketing are expected to be 6 million tons, compared to 8.033 million, with government procurement and ending stocks also below last marketing year. France’s AgriMer says 84% of the soft wheat crop is harvested, compared to 50% last week and 12% last year, sped up by the weather. Russia’s Ag Ministry says the running total for the grain harvest is 30 million tons, with yields above year ago levels. Ukraine’s Ministry of Agrarian Policy says the winter grain harvest is 18% complete at 6.5 million tons, including 3.8 million tons of wheat.