Friday, June 2, 2023
Closing Markets: Corn: +17 old & +11 new. Beans: +23 old & +15 new. Wheat: +8.
Pierson will be having an open house on Wednesday, June 14th. Lunch will be served at 11am and the tour will follow at 1pm. Please RSVP to Gloria by calling 217-615-1349 or emailing her at glitwiller@tfgrain.com. Thank you!
Market Recap:
Futures were mixed for much of today’s session with grains under pressure and soybeans on the plus side. Much of the session centered around profit taking and positioning ahead of the weekend as well as an early start to aligning positions ahead of the June WASDE report. This data will be released next Friday the 9th and trade estimates will start to be released early next week. The global oilseed market firmed overnight, and this gave the soy complex support. Additional support came from thoughts OPEC+ may cut production in their weekend meeting. Grains are struggling with low demand and a sizable spread between the US and other sources for imports. The outside markets were firm today following a much better than expected jobs report and declining odds of a US recession. At the same time this gives trade mixed opinions on an interest rate hike next week. The US debt ceiling package was approved by Congress and will be signed by President Biden soon. Weather remains a factor in price discovery, but trade seems confident we will see rain across the Corn Belt in the next two weeks. Parts of the EU and China are reporting dry conditions as well. While current conditions are supportive, they are not enough to warrant another leg up in the market. Trade is instead focused on demand figures that are below expectations.
Corn futures struggled to start today’s session despite dry weather for much of the Corn Belt. A reported 34% of the US corn crop is in drought conditions, 8% more than last week. Trade is more concerned with US corn demand right now as cumulative export sales are at a ten-year low. Building pressure from the huge Safrinha crop in Brazil are weighing on corn, as well as chatter the Ukraine crop will be larger than expected. Harvest is progressing in Argentina and analysts have the crop at 32 million metric tons (mmt) compared to the USDA estimate for 37 mmt. World corn stocks are forecast to rise 23 mmt in the 2023/24 marketing year and this is a constant source of pressure. Corn futures uncovered short covering interest on today’s break and cleared initial resistance at the 50-day moving average which generated additional buying interest. July corn finished the week with a 5-cent gain.
Soybeans extended their recovery today following their test of the lower Bollinger Band earlier this week. While this gave the contract support, July futures were held in check by resistance at the 20-day moving average. A rebound in global oilseed values gave soybeans support as well, as did further reductions to the Argentine crop. The Argentine harvest is now 87% complete and forecasters have the crop at 21 mmt compared to the USDA 27 mmt projection. The US continues to see pressure from Brazilian exports with May shipments reported at 15.6 mmt, a year-to-year increase of 47%. Even with losses in Argentina world soybeans stocks in the 2023/24 marketing year are forecast to expand 11 mmt. Drought is also hitting the US soybean crop with 28% of production in dry conditions, an increase of 8% from last week. Domestic soybean demand remains high, and this gave the complex support today, as did a rebound in the crude oil market. July soybeans were up 15 ¼ cents for the week.
Wheat futures struggled early today but rebounded late in the session on pre-weekend short covering. Wheat tried to take support from global weather concerns, but these potential losses are already factored into values. Weather has started to improve in some regions of the world, mainly Argentina and Australia, which is tempering buying interest. The US Plains have received heavy rains to delay harvest and generate quality concerns. An estimated 6% of the US spring crop and 46% of the winter crop are suffering from drought, both down from last week. The greatest quality loss to the global crop is in China where 30 mmt of the 137 mmt crop is expected to be feed grade. Global wheat stocks are forecast to decrease 3% in the 2023/24 marketing year, but some doubt is being cast over this given improving conditions. The lack of exports through the Black Sea corridor are being overlooked as Ukraine continues to make land shipments. Russian wheat remains the cheapest in the global market and is capping any rally attempt. July wheat in Chicago finished the week’s trade up 3 cents.
Export sales for the week ending May 26th all fell below needs to reach yearly expectations. Corn sales were split with 7.35 mbu on old crop and 12.3 mbu new crop. Soybean sales totaled 4.53 mbu of old crop and 11.06 mbu new crop. Old crop wheat sales were a negative 7.73 mbu as sales rolled to new crop where bookings reached 17.14 mbu. Unshipped old crop sales now total 300.2 mbu on corn, 104.1 mbu foy soybeans, and 35.3 mbu on wheat. Unshipped new crop sales total 120.7 mbu on corn, 104.8 mbu of soybeans, and 98.3 mbu on wheat.
Beef sales for the week were down 1% from the previous week at 18,100 metric ton tons. Pork sales were down 23% from the prior week at 22,600 metric tons. Japan and South Korea were the main beef buyers while Mexico booked the largest volume of pork. We did see a small volume of beef sold to China but no pork which has been the trend in recent weeks.
Census data showed soybean crush in April was a record for the month at 187 mbu. This was below the 198 mbu that was crushed in March but well above the 181 mbu crushed in April 2022. Soy oil production in April totaled 2.24 billion pounds. This was a 4% reduction from March but an increase of 4% from April 2022. Soybean crush needs to maintain this record consumption to reach the yearly USDA projected usage.
Census data also showed a corn usage figure for April of 416 mbu. This was a decrease of 5% from March but nearly steady from April 2022. Dried distiller grain production for the month totaled 1.62 million tons. This was down 5% from both March and last April. Cumulative demand shows corn consumption is down nearly 75 mbu from the USDA yearly projection.
Have a great evening!
Chelsey White
Emery Manager & Originator:: Topflight Grain Cooperative, Inc.
593 Emery Rd :: Maroa, IL 61756
Phone:: 217-794-2240
E-Mail:: cwhite@tfgrain.com
Web:: www.topflightgrain.com
This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any trading strategy, promotional element or quality of service provided by Topflight Grain Cooperative, Inc. Topflight Grain is not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable but is not guaranteed as to its accuracy. Contact Topflight Grains designated personnel for specific trading advice to meet your trading preferences. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by Topflight Grain Cooperative, Inc.
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