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Grain Comments: 07.19.23

The ongoing Russian attacks on Ukraine ports and infrastructure supported overnight trade with corn up 15-20 cents, soybeans up 15 to 20 cents, and wheat 20-25 cents higher. The US dollar and equities were higher while energies were mixed.

 

Today’s Reports: Weekly Ethanol Data

 

  • Ukraine stored grain damaged in Russian attacks
  • Brazil July corn, soy, meal, and wheat exports record high
  • US retail sales in June lower than expected

 

There are two different opinions forming when it comes to current crop weather and production potential. Widespread rains have moved through the Corn Belt in recent weeks with many areas picking up heavy precipitation. This is the primary reason the crop ratings improved as much as they did in Monday’s report. While crop ratings are not a good indicator of yield potential, several analysts have already started to increase their yield projections as a result, mainly on corn. A few are now again at trend and feel the crop could get even larger. While this is possible, there is still a large amount of growing season in front of us and potential for yield loss. Long range weather outlooks are indicating heat will return to the Midwest in August which is a concern for both corn and soybeans. This is causing weather premium to be added back into futures, even with the recent improvement to crop ratings. Trade is also heavily vested in current export demand and how the US is losing its share of the global market. Much of this is from price spreads between us and other sources, and the recent recovery in futures is doing little to attract importer interest. The escalating fighting between Ukraine and Russia may elevate grain demand though as even with three ports still open in Ukraine, shippers are unwilling to enter the region.

 

Highlights

* Drought continues to impact Canadian Plains

* US still seeing draft restrictions

* US Fed reserves to meet next Tues/Wed

* Economists predict another rate hike

* Slowing inflation may halt further rate increases

* Global economy still under pressure

* Lower commodity values support processor margins

* Lower futures not deterring production expansion

* High use of temp storage in Brazil

* August options expire Friday

 

Corn

* Safrinha harvest advancing

* Brazil production estimates rising

* YTD US export -33% from last year

* US exports in line with USDA estimate

* US pollination weather quite favorable

 

Soybeans

* Canola values highest since January

* Brazil crop estimate topping USDA

* Brazil July exports est 9.4 mmt

* Brazil soy 60c/bu under US

* US YTD exports +3% from USDA est

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