Grain Comments: 06-13-2023

Good morning:

Corn continued to dominate overnight trade volume with soybeans driving gains; the spot July corn contract drove up against the 100- day moving average yesterday and again this morning and has yet to break out above it, but bullish concerns are high after two straight weeks of ratings declines. Rain is forecasted later this week for the heart of the belt, but that event could be a crucial one to stem condition declines, as the general warm and dry trend continues. June is not the make-or-break month for corn—that’s July—but prospects for a record national yield (per the USDA) are thinning.

Precipitation was again confined far south/southwest over the past 24 hours, holding there through mid-week as well before rains develop in the far WCB on Thursday, and move through the Midwest Friday/Saturday. Coverage and amounts look fairly solid from that upcoming event, now with better expectations in the northern belt as well, but chances available throughout. 6-10- and 11-15-day maps continue to run mixed precipitation wise, with the best chances in the northern Plains/far NW belt, as well as the Ohio River Valley/far SE belt. The heart of the Midwest is still on the dry side. Temperatures remain on the high side of normal up into the end of the month of June.

The condition rating of corn, soybeans, and spring wheat all declined last week which was fully expected by trade. The US corn crop is now rated 61% Good/Excellent, down 3% on the week. The Poor/Very Poor rating remains low though with just 8% of the crop rated in this range. The soybean crop is now rated at 59% G/E which was a 5% decline from week to week. The Poor/Very Poor rating on soybeans remains low at just 9% of the crop. Spring wheat slipped 4 points lower to be rated 60% G/E. The winter wheat crop rating improved though and now stands at 38% G/E, up 2 points. If we do not see rainfall across the Corn Belt these numbers will likely shift again next week. Trade will start to show more interest on the Poor/Very Poor rating as well. The question now is how much risk premium needs to be added to futures. If the US crops remain stressed, we will start to see yield potential ratchet lower as well. Lower yields are not a given, but with low ratings, the possibility does increase. The demand side of balance sheets will likely decline as well, and potentially keep ending stocks at manageable levels even with crop loss.

Have a great day!