Written Commentary
SOYBEANS
The soybean complex was sharply higher across the board. Soybeans were up $.40 – $.58, soybean meal was $5 – $9 higher, while soybean oil was up 250 – 275. July-23 spread over Nov-23 fell $.12 to $1.36. Today’s rally in Nov-23 soybeans was capped at its 100 day MA at $12.95 ½. Next resistance is at $13.25. July-23 oil has surged to a 3 month high. Next resistance is 61.83. Old crop soybean export sales were strong at 18 mil. bu. the highest in 12 weeks. Spain was the most noted buyer with 8 mil. bu. May-23 NOPA crush at 178 mil. bu. was above expectations of 176 mil. and a record high for the month. Implied total crush for May-23 at 188 mil. bu. is also a record high. YTD crush thru the first 9 months of the Sept thru Aug MY at 1.682 bil. bu. is up .5%, in line with the USDA forecast. Expect no change to the current USDA crush forecast of 2.220 bil. bu. in the July-23 WASDE. Soybean oil stocks fell to 1.872 bil. lbs., well below the average est. and below the range of estimates of 1.89 – 2.05 bil. lbs. Implied soybean oil usage is bullish. The Rosario Grain Exchange lowered their Argentine production forecast by 1 mmt to 20.5 mmt, well below the revised USDA est. of 25 mmt. The BAGE reports Argentina’s soybean harvest advanced 4% to 98% complete. They also reduced their production forecast .5 mmt to 20.5, same a RGE. Despite today’s price surge, spot futures crush margins were little changed. Soybean oil product value has surged to 42.6%, a 7 month high.
CORN
Prices surged $.15 – $.25 led by new crop as the July-23/Dec-23 spread narrowed to $.49, its lowest level in 6 weeks. Dec-23 stopped just shy of the March high of $5.76 ¼. Next resistance is $5.85, the midpoint between the contracts high and the May low. Until today it seems the need for additional weather premium has been held in check so far this growing season due to weak demand. This morning’s updated drought monitor shows drought conditions deepening across Eastern NE all the way east to PA. Moisture shortages for mid-June are worse than the last major US drought in 2012. The need for moisture has become immediate, particularly for corn. Weather forecasts suggest limited prospects for rain across several key growing regions in the central Midwest. While temperatures have been seasonably mild, longer range models have threatened the expansion of a high pressure ridge in the southern plains and Delta up thru the southern Midwest during the last week of June. If verified it would result in above too much above normal temperatures, further reducing soil moisture. Look for conditions to continue to deteriorate in next Tues. crop condition report along with yield prospects. For reference the US corn yield in July-2012 was slashed 20 bpa to 146 bpa. The final yield came in at 123 bpa. Old crop export sales were routine at 11 mil. bu. YTD commitments at 1.520 bil. are down 35% from YA, vs. the revised USDA forecast of down 30%. Strategie Grain lowered their EU production forecast to 61.2 mmt from 62.1 mmt last month. The BAGE reports Argentine harvest has reached 37.5%, up from 33% LW. They held their production est. at 36 mmt, vs. the USDA forecast of 35 mmt.
WHEAT
Wheat prices also surged higher across the board, largely in sympathy with corn and the soybean complex. All classes were $.24 – $.31 higher. Chicago July-23 has surged thru resistance at the 50 day MA making a new monthly high in the process. Next resistance is last month’s high at $6.69, followed by the 100 day MA at $6.89. KC July-23 is back above $8, next resistance is its 50 and 100 day MA’s at $8.24 and $8.31 respectively. Export sales at 6 mil. bu. were below expectations. YTD commitments at 145 mil. bu. are down 18% from YA, vs. the USDA forecast of down 6.5%. Commitments represent 20% of the USDA forecast, below the historical average of 23%. Strategie Grain lowered their EU soft wheat production forecast to 128.7 mmt, down from 130 mmt last month. The Rosario Grain exchange forecasts Argentine 23/24 wheat production at 16.2 mil. mt on planted area of 5.6 mil. hectares. The BAGE reports wheat plantings have reached 39.5%.
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