Afternoon report: Corn also moves slightly higher Wednesday, while wheat trends lower
The prospect of plentiful hot, dry weather in the central U.S. rolling into August prompted a round of technical buying that lifted nearby soybean contracts more than 3% higher on Wednesday. The spillover strength also helped corn prices find moderate gains today. Wheat failed to follow suit, meantime, with most contracts down around 1.75% as traders eye Ukraine’s latest export prospects.
More rain is on its way across the lower Midwest between Thursday and Sunday, with a band stretching from southern Kansas through Kentucky and Tennessee likely to gather the largest totals (more than 4″ in some spots), per NOAA’s latest 72-hour cumulative precipitation map. NOAA’s 8-to-14-day outlook predicts a return to seasonally hot, dry weather for most of the Corn Belt between August 3 and August 9.
On Wall St., the Dow climbed 378 points in afternoon trading to 32,140 as investors absorbed news from the latest Federal Reserve meeting that concluded today. The Fed enacted another interest rate hike of 75 basis points in an attempt to slow inflation trends, a move that was largely expected. Energy futures jumped significantly higher, with crude oil up more than 2.5% this afternoon to $97 per barrel. Diesel rose 3.5%, with gasoline up around 1.75%. The U.S. Dollar softened moderately.
On Tuesday, commodity funds were net buyers of all major grain contracts, including corn (+9,000), soybeans (+13,500), soymeal (+7,000), soyoil (+7,500) and CBOT wheat (+12,500).
Corn
Corn prices made moderate inroads on Wednesday amid a somewhat choppy session. Spillover strength from soybeans ultimately allowed for enough technical buying to lift prices 0.5% to 0.75% higher today. September futures added 4.75 cents to $6.0175, with December futures up 3.5 cents to $6.0425.
Corn basis bids were mixed on Wednesday after sinking 5 to 10 cents lower at three Midwestern ethanol plants while firming as much as 3 cents higher at an Illinois river terminal today.
Ethanol production declined slightly to a daily average of 1.021 million barrels for the week ending July 22. It was also marked the tenth consecutive week that the daily average stayed above the 1-million-barrel benchmark. Ethanol stocks eased 1% lower this past week.
Ahead of tomorrow morning’s export report from USDA, analysts expect the agency to show corn sales ranging between 7.9 million and 36.4 million bushels for the week ending July 21.
South Africa’s Crop Estimates Committee reported earlier today that it expects to see a 2022 corn harvest of 579.2 million bushels. That would be a year-over-year reduction of nearly 10%, if realized. South Africa is the continent’s top corn producer.
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Preliminary volume estimates were for 219,714 contracts, shifting moderately below Tuesday’s final count of 274,661.
Soybeans
Soybean prices jumped substantially higher Wednesday on a round of technical buying as traders began to digest the latest mid-range forecasts, which call for ample hot, dry weather across the central U.S. in late July and early August. Quality ratings already fell more than expected last week and are in danger of additional cuts. August futures climbed 47 cents to $15.7975, with September futures up 27.75 cents to $14.2750.
Soybean basis bids fell 10 to 20 cents lower at three Midwestern processors while holding steady elsewhere across the central U.S. on Wednesday.
Prior to Thursday morning’s export report from USDA, analysts expressed some disagreement on how soybean sales will shake out for the week ending July 21. Individual trade guesses ranged between net reductions of 3.7 million bushels and net sales of 29.4 million bushels. Analysts also expect USDA to report between 75,000 and 450,000 metric tons of soymeal sales, plus up to 30,000 MT of soyoil sales.
Indonesia is conducting road tests on two types of biodiesel that contain 40% palm oil and will decide by the end of this year whether they are acceptable for public use. Indonesia already has the highest biodiesel blending mandates in the world, at 30%. The move is meant to curb the country’s fuel imports.
If you venture to the 2022 Farm Progress Show in Boone, Iowa, you’ll get the chance to see a new 42,560-square-foot soy-based asphalt project, sponsored by the Iowa Soybean Association, that serves as yet another showcase of the oilseed’s amazing versatility. Click here to learn more about this project.
Preliminary volume estimates were for 187,872 contracts, tracking modestly above Tuesday’s final count of 168,475.
Wheat
Wheat prices faded 1.75% lower today on renewed hopes that Ukrainian grain will soon be shipped out of Black Sea ports again. Harvest progress across the Northern Hemisphere continues to apply downward pressure as well. September Chicago SRW futures dropped 14.5 cents to $7.8925, September Kansas City HRW futures fell 15.25 cents to $8.6175, and September MGEX spring wheat futures lost 16.5 cents to $9.1225.
Ahead of Thursday morning’s export report from USDA, analysts expect the agency to show wheat sales ranging between 9.2 million and 23.0 million bushels for the week ending July 21.
Russian consultancy Sovecon slightly raised its forecast for the country’s 2022/23 wheat exports, which it now expects to reach a record-breaking 1.576 billion bushels. Sovecon also raised is estimates for Russian wheat production this upcoming season to 2.973 billion bushels. Russia is the world’s top wheat exporter.
Egypt has cancelled contracts to purchase of Ukrainian wheat totaling 8.8 million bushels that were initially set for delivery back in February and March but have not been loaded after Russia’s invasion grinded port traffic to a halt. However, a recent UN agreement may allow for Black Sea shipping lanes to reopen in a matter of days.
Taiwan issued an international tender to purchase 1.9 million bushels of grade 1 milling wheat from the United States that closes on August 4. The grain is for shipment between September 21 and October 5.
Jordan purchased 2.2 million bushels of hard milling wheat from optional origins in a tender that closed yesterday. The grain is for shipment in late December.
Preliminary volume estimates were for 62,256 CBOT contracts, sliding below Tuesday’s final count of 72,252.
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