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Grain Comments: 07.21.23

Pre-weekend profit taking weighed on overnight trade with corn 10-15 cents lower, soybeans down 10-15 cents, and wheat 15-20 cents lower. The US dollar, energies, and equities were all higher.

 

Today’s Reports: Cattle on Feed

 

  • August options expire today
  • China to expand trade with Ukraine
  • US drought improves

 

We will likely see more pre-weekend positioning in the market than normal today. Managed money traders have been buyers all week so to see some profit taking ahead of the weekend would not come as a surprise. This will depend heavily upon updated weather models and which ones the crowd puts the most belief in. The majority of current outlook models are leaning towards warmer and drier conditions as we move into August which will apply additional stress to developing crops. This is rapidly becoming more of a concern for soybeans where no yield loss can be tolerated. Corn balance sheets have more room for yield loss at this time. Any further escalation between Ukraine and Russia will also be monitored into weekend. Looking forward to next week trade will again be heavily focused on these same two topics. Any change in either over the weekend could create a volatile session Sunday night. Next week we will also see more attention on month end positioning. We will not see the spot contracts go into delivery which will temper this influence. That said, managed money traders may want to show monthly profits which will still be a factor in price discovery.

 

Highlights

* Wide crop variance makes size estimate difficult

* Rate hike from Fed expected next week

* Some economists predict rate cuts will follow

* UN working to allow Ukraine exports

* UN also pushing for Russian fertilizer exports

* EU may ban Ukraine imports past Sep 15th

* Lack of exports impact Ukraine revenue

* More countries suspend food grain exports

* US ethanol margins remain very strong

* US gasoline demand +3.9% from last year

 

Corn

* Brazil may trim 23/24 corn plantings

* US corn in drought -9% last week at 55%

* US corn in drought lowest in 6 weeks

* New crop US export sales -39% from last year

* US export sales lowest since 2019

 

Soybeans

* US soy in drought -5% at 50%

* Soy drought area a 6-week low

* Old crop US sales 3% under expectations

* ABIOVE projects 97.5 mmt Brazil exports this year

* USDA has Brazil exports at 95 mmt

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