Grain Comments: 07-13-2023

Good morning:

The grains are recovering from immediate post-USDA losses, but the bearish fundamental shock lingers; proverbial million-dollar rains in Iowa and surroundings yesterday should continue to raise crop ratings.

Big-time rains fell yesterday across the heart of the corn belt, with action further south today through Saturday; 6–10-day maps remain normal-to-above precipitation wise, with 11–15-day forecasts trending a bit drier overall. Temps hold on the cool side through 6-10, warming up slightly for the 11-15 day.

The trade has a lot to unpack from yesterday’s WASDE. After the first corn yield revision in a July report since 2012, the question will turn to how many more revisions lower we may see in coming months. If realized, the 177.5 bu/acre in the July report would be the largest national yield on record for the United States. Does the current drought status, crop conditions, and other data points support the largest ever corn yield? Perhaps, but we have a long way to go before we have a definitive answer to that question. On the soybeans, the yield question lingers as well – will the soybean crop indeed achieve a 52 bu/acre? Or are conditions such that we have likely taken off the high-end yield? Will the stocks-to-use ratio rise unexpectedly high because of poor export demand? The decline in exports by 125 mil bu means USDA now projects soybean exports will DECLINE year-over-year, a stark data point from the report. In the greater market, the dollar index has fallen to new lows from April 2022; how much will a declining dollar support an ag market? These questions will be parsed in the coming weeks, and the weather will now return as the main focus until August when the yield picture could become clearer. Until then the bulls will need something to their hats on if prices are expected to stop probing the lows.

Have a great day!