Grain Comments: 07.26.23

A lack of fresh bullish news weighed on overnight trade with corn 7-10 cents lower, soybeans 1-2 cents lower, and wheat down 15-20 cents. The US dollar and equities were weaker while energies were mixed.

Today’s Reports: Weekly Ethanol Data, Fed Rate Decision

• US gasoline values at year to date highs
• Inflation may impact global production
• China to offer more economic stimulus

While still weeks away trade is already starting to look to this fall’s upcoming harvest. The main point of interest is obviously what we will see for US production, but other factors are starting to take precedence, mainly what we may see for country movement. Over the past few weeks, we have started to see more movement of stored old crop bushels, both from producers and commercial elevators alike. This is not that surprising given the rally we have had in futures values in recent weeks. There may be another factor for elevated country movement as it is not uncommon to see higher farmer selling when developing crops looks better. The improvement we have had to crop ratings and more favorable weather outlooks are giving farmers hope of higher yields. The question now is what may happen this fall when harvest begins. Many farmers and grain terminals across the Corn Belt will be empty and able to store a large volume of harvest bushels. Given thoughts the markets will remain strong may keep inventory locked down until later in the new crop marketing year, especially with adequate cash flow still being reported. Interior basis has softened in recent weeks on higher movement, but this may be temporary if as much inventory is stored as suspected.

Highlights

• Fed expected to raise rates 25-basis points
• Rates expected to hold going forward
• Strong labor market preventing recession
• Chinese economy continues to struggle
• Brazil plantings to increase 36.5 mil acres next 10 years
• Majority of this increase to soybeans
• Argentine sales incentive not a huge factor
• More draft restrictions on US rivers
• Market volatility building
• Canadian crops reporting losses from weather

Corn

• Russia/Ukraine 22/23 exports est 33.1 mmt
• Ukraine/Russia 23/24 exports est 23.7 mmt
• Brazil harvest approaching 50%
• Brazil corn values +4% in past week
• Quotas to limit Argentine sales

Soybeans

• YTD Brazil exports record 69 mmt
• Brazil exports +74% last year
• Brazil crush also record high
• US crush margins favorable
• August weather outlooks non-threatening