Grain Comments: 07.12.24

Good morning. Happy Friday. And happy USDA report day. Ag markets are mostly lower, as the overnight trade has seen small ranges and light volume. Yesterday’s higher closes were likely the result of fund short covering, with traders now either placing bearish bets on today’s data, or waiting until after the report to take on new positions. Report estimates undoubtedly lean bearish, but the question becomes how much of the burdensome US 2024 supply situation has already been priced in? As is usually the case on WASDE days, it is the trade’s reaction to the numbers that will likely have more importance to future price direction than the numbers themselves. Corn futures are trading 3-4 cents lower this morning, soybean futures are trading either side of unchanged, and the Chicago wheat market is down 7-8 cents. Products are lightly mixed, soybean meal is down around 50 cents/ton, and soybean oil is up 20-30 points. Outside markets are mixed, crude oil futures are up 50-70 cents/bbl, the Dow Jones index is up 50 points, and the US$ index is down 10 points. No new highs for the NASDAQ or the S&P500 over night following yesterday’s reversals lower.

Today’s Reports: US June PPI; USDA July WASDE; CFTC Commitment of Traders

• Deliveries for Friday included 63 contracts of corn, 137 contracts of soybeans, 28 contracts of wheat, and 126 contracts of soybean oil.

• The Buenos Aires Grains Exchange, in a weekly report, estimated Argentina’s corn harvest at 70.2% complete, up 12.1% from last week. No change was made to their production estimate of 46.5 mmt’s.

• Same group estimated wheat planting in Argentina at 92.9% complete, up 12.1% from last week. Planted area is seen at 6.3 mil ha’s. 97% of the crop is currently rated in the good/excellent category.

• The Rosario Board of Trade, another private group, sees Argentina wheat planted area in the coming season at 6.7 mil ha’s, and sees production at 20.5 mmt’s. Both are slightly smaller than previous estimates of 6.9 mil planted hectares, and 21 mmt’s of production.

• NOPA will release soybean crush data for June on Monday; the trade sees soybean crush in the month at 177.936 mil bu’s, which would be down 3.1% from May, but up 7.8% from June of 2023. This would also be the largest June soybean crush on record.

• Soybean oil stocks as of June 30th are estimated at 1.669 bil bu’s, which would be down 3.2% from the end of May, and down just 1.2% from same month last year. If realized, the stocks number would be a five-month low.

• According to China’s General Administration of Customs, soybean imports in June reached 11.114 mmt’s; this is up 10.7% from same month last year. Cumulative year-to-date imports have reached 48.481 mmt’s, down 2.2% from last year.

• China also estimates grain production in 2024 at 149.78 mmt’s, up 2.5% from last year despite adverse weather in some regions throughout the last few months.

• Turkish President Tayyip Erdogan told Ukrainian President Volodymyr Zelenskiy at the NATO summit this week that Turkey is continuing efforts to end the conflict in Ukraine, and has also tried to revive the Black Sea Grain Initiative.

• French Ag office Agrimer sees just 4% of the soft wheat crop in the country harvested as of July the 8th, down from last year’s 26% on this date, and the five-year average of 19%. Same group sees exports declining some 15%, on a crop that is roughly 15% lower than last year.

• Equity markets on Friday will be tuned into the morning’s PPI report, following data on Thursday that showed a smaller inflation number than economists had predicted. The trade will be watching for further evidence of data that would support the beginning of the rate-cut cycle.

• The Midwest weather pattern remained active on Thursday, with afternoon thunderstorm activity providing scattered rainfall across MO, IL, and IN. Totals ranged from 0.1-1.5″, with areas in Western MO/Eastern KS receiving locally heavier amounts. The Carolina’s and the East Coast also saw moisture of 2-4″ on Thursday.

• For next week, the GFS and EU models have been in good agreement, but now the GFS has turned wetter, seeing rains in KS/MO, while the EU sees moisture staying mostly in the Ohio River Valley. Temps will be warm for the next several days, before low pressure again provides more mild air for most of the Corn Belt in the middle of next week.

• While diverging on week-one overnight, models have come into better agreement on the week-two forecasts, with the GFS now being more in-line with the EU and the CPC models in seeing moisture focused on the Southern half of the country and the Southeast. The Northern Corn Belt will be dry, but this pattern is desired following heavy rains and flooding during the end of June.