Harvest pressure hammers wheat prices

Afternoon report: Corn and soybeans also slump lower in Tuesday’s session

Grain prices got off to a bad start in a holiday-shortened week after generally favorable weather forecasts and harvest progress for wheat spurred plenty of technical selling today. Wheat prices were hit the hardest, with most contracts losing 4.5% to 5.5%. Corn prices also moved significantly lower, eroding more than 3% lower today. Soybeans were relative spared but still fell more than 1%.

Not much rain is expected to fall on Midwest and Plains between today and Friday, although a few places could gather 0.25″ or more during that time, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s 8-to-14-day outlook predicts seasonally dry weather could remain in effect for the eastern Corn Belt between June 28 and July 4, with warmer-than-normal conditions likely for most of the central U.S.

On Wall St., the Dow jumped 634 points higher in afternoon trading to 30,522 in what one strategist fears could be “a bounce but not the bottom” as investors continue to wrangle with anxieties over high inflation and rising interest rates. Energy futures turned higher, with crude oil up 1% this afternoon to reach $110 per barrel. Diesel and gasoline saw much more modest gains today. The U.S. Dollar softened moderately.

Last Friday, commodity funds were net buyers of soymeal (+2,500) contracts but were net sellers of corn (-1,000), soybeans (-2,000), soyoil (-9,000) and CBOT wheat (-17,000).

Corn

Corn prices followed wheat prices lower on a round of technical selling on Tuesday. Favorable weather forecasts are also putting quality and yield concerns farther in the rearview mirror in recent sessions, a trend that continued today. July futures dropped 24 cents to $7.6050, with September futures down 28.25 cents to $7.0950.

Corn basis bids were steady to mixed, especially across several Midwestern processors, where bids climbed 10 cents higher at a Nebraska location while tumbling 15 cents lower at an Illinois location on Monday.

Corn export inspections reached 46.6 million bushels last week. That was slightly lower from week-ago totals but on the higher end of trade estimates, which came in between 23.6 million and 51.2 million bushels. China, Mexico, Japan, Colombia and Taiwan were the top five destinations. Cumulative totals for the 2021/22 marketing year are still trending well below last year’s pace, with 1.817 billion bushels.

Ahead of the next USDA crop progress report, out later this afternoon, analysts think the agency will dock corn crop quality ratings by two points, with 70% rated in good-to-excellent condition through June 19. Individual trade guesses ranged between 68% and 71%.

Versus year-ago volumes, Ukraine’s June grain exports are down 55.5% over the first 20 days of the month, per the latest data from the country’s agriculture ministry. That includes 27.1 million bushels of corn exports and just 2.3 million bushels of wheat exports. Ukraine is a significant seller of both commodities.

The European Commission reported that EU corn imports during the 2021/22 marketing year are trending moderately above last year’s pace after reaching 631.9 million bushels through June 19.

Preliminary volume estimates were for 444,368 contracts, moving well above Friday’s final count of 292,330.

Soybeans

Soybean prices saw a double-digit drop after spillover weakness from corn and wheat spurred some technical selling today. July futures dropped 18.75 cents to $16.8325, with August futures down 22.5 cents to $15.9975.

Soybean basis bids were steady to mixed across the central U.S. on Monday, trending as much as 10 cents higher at an Iowa processor and falling as much as 10 cents lower at an Indiana processor today.

Soybean export inspections were tepid last week, coming in at 15.7 million bushels, sliding moderately below the prior weeks’ tally of 22.3 million bushels. It was also slightly on the low end of trade estimates, which ranged between 11.0 million and 23.0 mil-lion bushels. Egypt, Mexico, China, Pakistan and Colombia were the top five destinations. Cumulative totals for the 2021/22 marketing year are still running significantly behind last year’s pace, reaching 1.870 billion bushels.

Prior to this afternoon’s crop progress report from USDA, analysts are expecting the agency to dock soybean quality ratings by a point, with 69% of the crop rated in good-to-excellent condition through Sunday. Planting progress is expected to move from 88% complete a week ago up to 95%.

European Union soybean imports during the 2021/22 marketing year have reached 518.8 million bushels through June 19, which is slightly below last year’s pace so far. EU soymeal imports are also lower year-over-year, with 16.04 million metric tons.

Preliminary volume estimates were for 202,056 contracts, trending moderately above Friday’s final count of 169,017.

Wheat

Wheat prices faded to the lowest level in several months as harvest pressure continues to trigger ample technical selling. Most contracts lost more than 5% today. Of particular note, nearby CBOT contracts closed below $10 per bushel for the first time since early April. Prices remain historically high but have had a hard time gathering positive momentum since mid-May. Today, July Chicago SRW futures dropped 56.75 cents to $9.7750, July Kansas City HRW futures lost 63.75 cents to $10.4125, and July MGEX spring wheat futures fell 53 cents to $11.1650.

Wheat export inspections fell to 12.2 million bushels last week, falling nearly 20% below the prior week’s results. It was also on the lower end of trade estimates, which ranged between 11.0 million and 18.4 million bushels. The Philippines, Thailand, El Salvador, Honduras and Jamaica were the top five destinations. Cumulative totals for the young 2022/23 marketing year are already moderately behind last year’s pace, with 35.6 million bushels.

Ahead of this afternoon’s USDA crop progress report, analysts expect to see spring wheat crop quality ratings slide a point lower, with 53% in good-to-excellent conditions. For winter wheat, analysts expect quality ratings to hold steady, with 31% of the crop in good-to-excellent condition.

Hot dry weather across large parts of Europe has the MARS crop monitoring service lowering its estimates for 2021/22 EU soft wheat yield potential to 85.7 bushels per acre. That would be 4.7% below last season’s per-acre yield average, if realized.

Russia’s Sovecon consultancy estimates that the country’s June wheat exports will reach 29.4 million bushels. That would be the lowest monthly total since May 2021, if realized. Russia is the world’s No. 1 wheat exporter.

EU soft wheat exports during the 2021/22 marketing year are trending a bit above last year’s pace, reaching 980.3 million bushels through June 19. EU barley exports are down slightly year-over-year, with 314.6 million bushels over the same period.

Egypt’s supply minister said the country will likely need to import around 183.7 million bushels of wheat in 2022/23. Portugal will be added as a potential source moving forward.

Japan issued a regular tender to purchase 6.2 million bushels of food-quality wheat from the United States, Canada and Australia that closes on Thursday. Of the total, 35% is expected to be sourced from the U.S. The grain is for shipment in August.

Tunisia issued an international tender to purchase 2.8 million bushels of soft wheat and 2.3 million bushels of animal feed barley from optional origins that closes on Wednesday. Additional details about shipment were not immediately available.

Bangladesh issued an international tender to purchase 1.8 million bushels of milling wheat from optional origins that closes on July 5. The grain is for shipment 40 days after a contract is signed.

Preliminary volume estimates were for 147,636 CBOT contracts, which was 54% above Friday’s final count of 95,751.

Settlement Prices for Key Commodities

High
Low
Last
Change
Corn $/bushel

22-Jul
778.25
752.25
760.75
-24
22-Sep
732.75
699.5
709.25
-28.25
Soybeans

22-Jul
1702
1675.75
1681
-18.75
22-Sep
1550
1522.5
1526.25
-25.5
Soymeal $/ton

22-Aug
424.4
413.3
415.9
-5.8
Soyoil cents/lb

22-Aug
72.5
70.46
71.67
-0.64
Wheat $/bushel

22-Jul
1033.25
973.5
975.25
-56.75
22-Sep
1046
985.5
987.25
-57.75
KC Wheat

22-Jul
1108
1037
1041.25
-63.75
22-Sep
1112.75
1043.5
1048.25
-64
MPLS Wheat

22-Jul
1170
1110.75
1117.75
-53
22-Sep
1172.75
1110.5
1118
-54.5
Live Cattle cents/lb

22-Jun
138.25
137.25
137.875
-0.15
Feeder Cattle cents/lb

22-Sep
178
176.175
177.375
2.575
Lean Hogs cents/lb

22-Aug
110.225
107.4
109.6
1.725
Crude Oil $/barrel
*Energy prices may not represent final settlements
22-Jul
112.47
108.72
110.58
1.02
Diesel

22-Jul
4.5418
4.3135
4.389
0.0492
Unleaded Gasoline $/gallon

22-Jul
3.945
3.717
3.801
0.008
Natural Gas

22-Aug
6.948
6.531
6.767
-0.139
U.S. Dollar Index

22-Sep
104.315
103.73
104.22
-0.268
Gold $/ounce

22-Jul
1842.4
1831
1838.6
3
Copper

22-Jun
4.065
3.965
4.0355
0.018
Fertilizer Swaps

(as of 06/17)

DAP Tampa-index

1,090.0
-15
DAP-New Orleans

887.4
24.8
Urea-New Orleans

485.0
-57.87
Urea-Middle East

635.0
-40
Urea-Black Sea

585.0
35
UAN (32%) New Orleans

601.3
-19.29

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