Soybeans, corn continue to rally on weather concerns

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Soybeans, corn continue to rally on weather concerns

Soybeans were higher on commercial and technical buying. Parts of the region will see more rain this week ahead of a generally hotter, drier pattern next week. August is typically viewed as the critical month for U.S. soybean development. The USDA’s first official yield guess of the season is out August 12th and will include an updated look at acreage following a resurvey of producers due to planting delays. Soybean meal was mostly lower on spread trade and profit taking after the recent move to multi-month highs, while bean oil was up sharply on oversold signals and uncertainties about 2022 U.S. production. Domestic soybean product demand is also a continued bullish influence. Old crop export sales were a net reduction following cancellations by unknown destinations and China, while new crop sales were solid, with unknown destinations and China the reported purchasers.

Corn was higher on commercial and technical buying. Corn is also watching development weather, including a chance of flooding in parts of the region. This week’s weather has generally been an improvement, but field surveys will likely show at least some damage from last week’s weather in portions of the Midwest and Plains and next week’s weather could also have an impact on later planted crops. Ethanol demand is good, even as exports continue to be slower than expected. With just over a month remaining in 2021/22, physical shipments last week failed to meet the mark to meet projections, while old crop sales were just over 150,000 tons. New crop corn sales failed to break 200,000 tons. Mexico was the big buyer for both old and new crop corn. There were no reported sales to China, with Beijing likely buying corn from Brazil, where the second corn crop harvest is ongoing. The Buenos Aires Grain Exchange says 74% of Argentina’s crop is harvested, with 14% of the crop called good to excellent, compared to 28% a year ago.

The wheat complex was higher on commercial and technical buying. There’s a continued lack of clarity about Ukraine’s ability to ship out of the Black Sea. A deal was reached last week, but that was followed by Russia attacking Ukrainian port structure at Odessa, while also continuing to attack civilians. Details are still being worked on, such as insurance for the vessels moving those goods into and out of port. Egypt has reportedly canceled 240,000 tons of previously purchased wheat from Ukraine originally scheduled for February and March delivery. SovEcon now sees Russia’s 2022/23 wheat exports at a record 42.9 million tons, up 300,000 from the last guess. APK-Inform estimates Ukraine’s 2022/23 wheat exports at 12 million tons, which would be down 6.7 million from 2021/22 due to lower production, drastically reduced export capacity, and damage to crops, all linked to Russia’s invasion. U.S. export demand is slow, but the USDA is projecting very tight global supplies this marketing year, which runs through the end of May 2023. Wheat shipments last week were bearish and sales were just over 410,000 tons, with the Philippines topping the list. Overall, that expected uptick in demand following Russia’s invasion of Ukraine and the heat damage to India’s crop has completely failed to materialize. The ongoing spring wheat crop tour in the northern U.S. Plains is showing generally good yields, even with a slight decline from day one to day two. The Buenos Aires Grain Exchange says 16% of Argentina’s wheat crop is in good to excellent condition, compared to 55% this time last year. The USDA’s attaché in Australia has 2022/23 wheat production at 31 million tons, compared to the most recent official guess of 30 million and the 2021/22 total of 36.3 million. Exports next marketing year are projected at 24 million tons, compared to 27.5 million this marketing year.