Ag Market View for July 24.23
The entire soybean complex was higher with beans up $.20 – $.25, meal was up $3 – $5, while oil surged 190 – 260 higher. Nov-23 soybeans made a new high for the move, matching its high from May-22 at $14.35. Next resistance is its contract high at $14.48 ¼. Aug-23 oil surged to its highest level in 13 months. Next resistance is its contract high at 74.32. Ukraine’s sunflower oil exports are forecast to reach 4.75 mmt for the 2023/24 MY. While this represents 38% of the global sunflower seed oil trade, it represents only 5% of the total vegetable oil trade. Export inspections at 10 mil. bu. were in line with expectations, however just shy of the 12 mil. bu. needed per week to reach the USDA export forecast. The USDA announced the sale of 121k (4.4 mil. bu.) of new crop soybeans to China. Last week money managers were net buyers of just over 13k contracts of soybeans, while their buying in meal was pretty much offset by selling in oil. The MM combined long position in the soybean complex is nearly 200k contracts, a 3 month high.
Prices were $.28 – $.34 higher as Dec-23 surged to its highest price level in a month. US weather this week is expected to be extremely stressful on developing corn, soybeans and spring wheat crops. Temperatures are expected to reach the mid to upper 90’s with some 100+ degree readings by mid-week as far north as SD and central IA. While very little rain is forecast for the week, longer range models continue to suggest the high pressure ridge will shift west offering better prospects for rain and slightly cooler temperatures in both the 6-10 and 8-14 day outlooks. Export inspections at only 12 mil. bu. were the 2nd lowest of the MY and well below the 27 mil. bu. needed per week to reach the USDA forecast. AgRural estimates Brazil’s 2nd crop harvest has reached 47%, up from 36% LW, however well below the YA pace of 62%. Last week MM’s were net buyers of 16,126 contracts of corn, reducing their short position to just under 47k contracts. Ukrainian corn exports for the 2023/24 MY are forecast at 19.5 mmt, down from 28 mmt in 22/23. Combined corn, wheat, and sunflower seed oil exports from Ukraine are forecast to reach 35 mmt, down from 50 mmt the last 2 marketing years, according to the July-23 USDA WASDE date. The Danube River was expected to be able to transport 20 – 24 mmt of agricultural products annually. With another 1 – 1.5 mmt of shipments exported monthly via rail or truck thru neighboring European countries, the 35 mmt export figures was possible. Despite the lower volume of trade, now it appears extremely unlikely to be met without access to either the Black Sea or Danube river for an extended stretch.
Prices were sharply higher across all 3 classes with several contracts of Chicago and KC wheat trading up the daily limit. Chicago Sept-23 was the only contracts to close up the $.60 limit. Overnight Russia expanded its bombardment of Ukraine’s infrastructure to now include grain warehouses near Reni on the Danube River along its border with Romania. While the extent of the damage isn’t entirely known, what’s becoming clear is that Russia is trying to cut Ukrainian agricultural exports off from the rest of the world. Next resistance for Dec-23 Chicago is its June high of $7.84 ¼. Dec-23 KC surged to $9.25, the highest price since Nov-22, next resistance is $9.70 ½. Dec-23 MGEX has also reached an 8 month high. Markets are becoming increasingly fearful of Ukrainian counter attacks that may impact up to a third of Russia wheat exports thru the Azov Sea, just east of the Black Sea. Combined Russian and Ukrainian wheat exports were forecast to reach over 27% of the global trade. IKAR reports Russian wheat export prices last week finished at $242/mt FOB, up from $228 the previous week. SovEcon reports Russian wheat exports last week reached 1.1 mmt, up 34% from the previous week. They expect July exports will reach 4.3 mmt, compared to 2.5 mmt July-22. The USDA forecasts Ukrainian wheat exports in 23/24 at 10.5 mmt, down from 16.8 in 22/23 and well below the 18.8 mmt in 21/22. Last week MM’s were sellers of nearly 2,300 contracts of Chicago wheat and just over 1,900 contracts of KC wheat.
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