Market News

Corn retreats with soybeans, wheat mixed

Soybeans were mixed. Contracts consolidated, watching the weather, with scattered rain in the region ahead of a hot, dry pattern next week. That’s expected to increase stress in parts of the Midwest and Plains and could last into early August, the critical month for soybean development. Old crop export sales were up on the week, but lower than average, while new crop was solid. The big buyers for old crop were the Netherlands and Germany, with a cancellation by unknown destinations, while Mexico, unknown, and China led the way for new crop. Brazil continues to dominate the export market. Brazilian vegetable oil group Abiove sees 2023 production for Brazil at 156.5 million tons with exports of 97.5 million, both a half a million more than the prior projections. The USDA’s attaché for Argentina has the 2022/23 total for that nation at 21.25 million tons, down 3.75 million from the official guess following worse than expected yield results in some areas following widespread drought. The office projects 2023/24 production at 50.5 million tons thanks to improved precipitation. The USDA’s next round of supply and demand estimates is out August 11^th.

Corn was lower on profit taking and technical selling. Near-term rainfall should help, but totals and coverage are uncertain, with a stressful pattern on tap for next week. That’s coming during the key pollination phase in some key growing areas. The Midwest did see a general improvement in drought over the past week, but with 85% of the region abnormally to exceptionally dry, it’s going to take more than a couple of weeks of slightly wetter weather, especially if temperatures reach forecasted levels. Old crop corn export sales were below last week, but slightly above average, mainly to Colombia and unknown, while new crop sales fell short of a half million tons, primarily to Mexico and Canada. Corn is also monitoring second crop harvest activity in Brazil. Agroconsult now projects that crop 107.2 million tons, which would be up 16% on the year, with exports of 54 million tons, including 5 million tons to China. However, that’s expected to further stress trade infrastructure already strained by a record soybean crop. Total corn production for Brazil is seen at 137.4 million tons. The USDA’s attaché in South Africa estimates that 2022/23 harvest is ongoing with record large production of 17.018 million tons and exports of 3.7 million tons but says a fourth consecutive record crop is expected to limit planted area in 2023/24. Still, the Pretoria office does expect South Africa to remain a net exporter.

The wheat complex was mixed. The trade continues to monitor the situation in the Black Sea region as Russia steps up attacks on Ukraine’s ports. There’s some talk that Moscow might be willing to return to the negotiation table for the Black Sea Grain Initiative, but Russia is asking for some steep concessions to fully rejoin the pact. For now, Russia controls the global wheat market and Ukraine is looking for alternative routes to ship grains and other commodities. Kyiv has also warned ships entering the Black Sea for Russian ports will be regarded as hostile, matching the warning earlier in the week from Moscow. It remains to be seen if this will drive any export business to the U.S. Last week’s export sales were bearish at 170,700 tons. Chile and Japan topped the list, with a net cancellation by unknown destinations. The trade continues to monitor the winter wheat harvest and development conditions in the northern U.S. Plains and Canada.