Morning report: Corn, soybeans and wheat all firm heading into Tuesday’s session. (Comments are updated by 7:30 a.m. Central Time.)
Overnight trends:
Corn: Up 13 to 14 cents
Soybeans: Up 20 to 22 cents
Wheat: Up 12 to 14 cents
An unexpectedly disappointing set of quality data from USDA’s latest crop progress report, out late Monday afternoon and covering the week through July 24, helped push grain prices substantially higher in overnight trading. Worries over Ukraine’s ability to safely export its grain continues to lend short-term support as well. Corn prices moved more than 2% higher, with most wheat contracts up around 1.75% and soybeans firming by more than 1.5%.
Overseas stock markets were mixed again today. Asian markets were mostly firm, anchored by gains of more than 1.5% in Hong Kong. European markets ranged between 0.5% gains and 0.5% losses in midday trading. On Wall St., Dow futures were down 146 points to 31,809 after retail stocks weakened on consumer spending worries.
Energy futures made moderate inroads overnight. Crude oil firmed nearly 1.75% higher to $98 per barrel on tightening supplies. Gasoline and diesel found similar percentage gains heading into Tuesday’s session. The U.S. Dollar firmed moderately.
The latest 72-hour precipitation map from NOAA shows plenty of additional rains could be delivered to a band stretching from Kansas to Ohio between today and Friday, with some areas set to gather another 2″ or more later this week. Official 6-to-10-day forecasts show a return to seasonally dry conditions for the Plains and parts of the Midwest between July 31 and August 4, with much hotter-than-normal weather likely for most of the U.S. during this time.
On Monday, commodity funds were net buyers of corn (+11,000), soybeans (+10,500), soymeal (+8,500) and CBOT wheat (+4,500) contracts but were net sellers of soyoil (-2,000).
NOTE: How do your farm’s crop conditions stack up against other operations around the country? Click this link to take the Feedback from the Field survey and share updates about your farm’s crop development. We review and upload results regularly to the FFTF Google MyMap, so farmers can see others’ responses from across the country.
Corn
Corn prices jumped more than 2% higher overnight after USDA unexpectedly cut quality ratings by three points in its latest crop progress report. Traders continue to closely monitor the situation in Ukraine, where fresh reports are coming out that Russian missiles have struck port infrastructures in the Mykolaiv region (although specific details of that attack remain scant for now).
Corn basis bids were mostly steady on Monday with one big exception – bids at an Iowa processor jumped 30 cents higher yesterday.
Corn export inspections fell to 28.5 million bushels last week. That was toward the lower end of trade estimates, which came in between 23.0 million and 47.2 million bushes. Mexico was the No. 1 destination, with 9.3 million bushels. Cumulative totals for the 2021/22 marketing year remain well behind last year’s pace, with 2.009 billion bushels.
Corn ratings dropped three points from a week ago, with 61% of the crop rated in good-to-excellent condition through Sunday. Analysts were only expecting USDA to shave one point off quality ratings, in contrast. Another 25% of the crop is rated fair (unchanged from last week), with the remaining 14% rated poor or very poor (up three points from last week). Physiologically, 62% of the crop is now silking, up from 37% a week ago but moderately behind the prior five-year average of 70%. And 13% has now reached the dough stage, versus the prior five-year average of 15%.
European Union crop monitoring service MARS lowered its estimates for the continent’s corn yield potential to 107.8 bushels per acre, citing widespread hot and dry conditions earlier this season. If realized, that would put EU corn yields nearly 8% below the prior five-year average.
The next FarmProgress365 seasonal sessions arrive later this week and focus on harvest preparation strategies and a timely look at the latest grain market trends. Three interactive sessions will take place between today and Thursday – click here to learn how you can participate.
The preliminary report from the CBOT showed daily futures volume moved slightly higher, to 304,986, while open interest dropped 4,424. Options volume fell to 85,393 and still moderately favors calls (56,590) over puts (28,803). Implied volatility for near-the-money September contracts rose to 35.4% and don’t expire for another 30 days.
Soybeans
Soybean prices firmed around 1.5% higher overnight on a round of technical buying largely spurred by lower-than-expected quality ratings issued by USDA yesterday afternoon. Spillover strength from a broad set of other commodities lent additional support.
On Monday, soybean basis bids were steady to mixed after firming 5 to 16 cents higher at two interior river terminals while fading 10 cents lower at two Midwestern processors yesterday.
Soybean export inspections declined moderately lower week-over-week to 14.3 million bushels. That was near the middle of analyst estimates, which ranged between 3.7 million and 21.1 million bushels. Mexico was the No. 1 destination, with 5.2 million bushels. Cumulative totals for the 2021/22 marketing year are running moderately below last year’s pace, with 1.947 billion bushels.
Soybean quality ratings took a two-point spill, with 59% of the crop now rated in good-to-excellent condition. Analysts had offered an average trade guess of 60% prior to this afternoon’s report. Another 30% is rated fair (up a point from last week), with the remaining 11% rated poor or very poor (also up a point from last week).
Nearly two-thirds (64%) of the soybean crop is now blooming, which is up from the prior week’s tally of 48% but still moderately behind the prior five-year average of 69%. And 26% is now setting pods, versus week-ago results of 14% and the prior five-year average of 34%.
Another round of interest rate hikes this month seems likely. Do these moves have a measurable effect on grain prices? Grain market analyst Bryce Knorr took a look at how 15 “closely watched assets” (i.e. stocks, corn, soybeans, crude oil, etc.) reacted a week after new statements on monetary policy were issued. Here’s what he found.
The preliminary report from CBOT showed daily futures volume increase to 159,629 while open interest firmed by 484. Options volume tumbled to 33,967 and still moderately favors calls (21,471) over puts (12,496). Implied volatility for near-the-money September contracts increased to 26.6% and expire in another 30 days.
Wheat
Wheat prices captured double-digit gains overnight as Ukraine continues to struggle with its grain production and exports this season. Eroding spring wheat quality ratings lent additional support, as did spillover strength from other grains.
Wheat export inspections made significant inroads, improving to 17.5 million bushels last week. That was also on the higher end of trade estimates, which ranged between 7.3 million and 20.2 million bushels. Mexico topped all destinations, with 3.5 million bushels. Cumulative totals for the 2022/23 marketing year are off to a moderately slow start versus year-ago results, meantime, with 95.1 million bushels.
Spring wheat conditions degraded three points lower this past week, moving to 68% rated in good-to-excellent condition through July 24. Analysts were expecting ratings to hold steady, however. Another 24% is rated fair (up a point from last week), with the remaining 8% rated poor or very poor (up two points from last week). Eighty-six percent of the crop is now headed. That’s up from 68% last week but a full 10 points behind 2021’s pace and the prior five-year average.
Winter wheat harvest progress came in below the entire range of trade estimates, at 77% completion through Sunday. That puts this year’s pace a bit behind 2021’s mark of 82% and the prior five-year average of 80%.
EU crop monitoring service MARS fractionally lowered its forecast for soft wheat yields to 85.4 bushels per acre, which is trending 4.9% below last year’s mark so far.
The preliminary report from CBOT showed daily SRW volume ease to 84,656, with open interest falling 242. Options volume fell to 23,495 and moderately favors calls (15,405) over puts (8,090). Implied volatility for September near-the-money options increased to 43.9% and don’t expire for another 30 days.
Volume in HRW wheat decreased to 41,496, with open interest trending 1,142 higher. Options volume is at 3,094 and moderately favors calls (2,016) over puts (1,078).
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