Bearish start to August for soybeans, corn, wheat
Soybeans were sharply lower on fund and technical selling. There are concerns about China’s economy because of COVID restrictions and palm oil was sharply lower ahead of the U.S session. Palm oil fell after Malaysia increased the amount of the critical vegetable oil exports are able to sell this marketing year. Soybean meal dropped on fund liquidation and bean oil was down on the losses in palm and crude oil. Near-term forecasts do have hot, dry weather in much of the region, potentially stressing the crop during key development stages. The USDA says 60% of U.S. soybeans are called good to excellent, up 1% on the week, with 79% of the crop blooming, compared to the five-year average of 80%, and 44% at the pod setting stage, compared to 51% on average. For June, the U.S. soybean crush was 174 million bushels, down 7 million from May, but up 12 million from June 2021, with refined soybean oil production 7% lower than the previous month, but 3% higher than last year. Export inspections were up on the month and the year, primarily to China and Mexico. The USDA’s next set of supply and demand numbers is out Friday, August 12th.
Corn was lower on fund and technical selling. Corn is also watching the weather, with the driest conditions expected to be in western growing areas. As of Sunday, 61% of U.S. corn is called good to excellent, unchanged, with 80% silking, compared to 85% normally in late July, and 26% at the dough making stage, compared to 31% on average. Russia struck another port in Ukraine over the weekend, but 26,000 tons of corn has left Odesa, bound for Lebanon. A resumption of exports from Ukraine would likely have some impact on U.S. corn export demand, but China already largely shifted away from U.S. corn a couple of months ago, in favor of supplies from Brazil. More than 70% of Brazil’s second crop is harvested. The European Union lowered its 2022 corn production estimate for the bloc to 65.8 million tons, a drop of 8% on the month due to lower yields in the nations being hit by hot, dry weather. 2022/23 imports by the E.U. are pegged at 16.5 million tons, up 1.5 million from the last guess. There’s talk that some of those imports could come from Brazil, not the U.S. The USDA’s E.U. attaché has production at 64 million tons with imports of 16.3 million tons. The USDA says 441.952 million bushels of corn were used for ethanol production in June, a decrease of 1% on the month, but an increase of 1% on the year. DDGS production was 1,918,611 tons, 1% more than the prior month, but just under 1% less than a year ago. Export inspections were up from last week, but down from last year, mainly to China and Mexico.
The wheat complex was lower on fund and technical selling. Wheat is waiting to see how long the Russia/Ukraine grain export agreement holds up. Several ships are reportedly waiting to leave port, but there are still issues to be worked out, including insurance for the vessels moving in and out of the Black Sea. Parts of the U.S. spring wheat region are also expected to see hot, dry weather over the next week. For spring wheat, 70% of the crop is in good to excellent condition, a week-to-week gain of 2%, and 97% has headed, compared to 99% on average. For winter wheat, 82% of the crop is harvested, compared to 85% on average. The European Union sees 2022 soft wheat production in the bloc at 123.9 million tons, 1.1 million below the most recent projection due to weather, with 2022/23 exports at 36 million tons, a decline of 2 million on the month. The USDA’s E.U. attaché estimates the crop at 130 million tons, with exports of 34.4 million. The USDA says the domestic second quarter wheat flour grind was 231.68 million bushels, a rise of 1% on the quarter and 4% from Q2 2021. Wheat export inspections were below a week ago and a year ago, with Mexico and Taiwan topping the list.