The corn market is currently firm and holding to the upper end of its range as it recovers from yesterday’s initial bearish reaction to the USDA’s WASDE report with support coming from higher wheat.
While the USDA raised its yield estimate for this year’s corn crop to a record 186.3 bpa, they lowered 24/25 ending stocks for the third time in a row to 2.057 billion bushels, slightly higher than expected, due to higher 23/24 exports and ethanol demand.
This week’s Drought Monitor showed an increase in drought conditions for the nation’s corn producing areas. Corn producing areas in drought increased 5% to 18%. While this may not have a large impact on this year’s crop, it bears watching in the coming months.
The drought in Brazil has resulted in the driest soil conditions in 30 years in two of the country’s largest producing states. While this is primarily an issue for soybeans right now, any extended delay in soybean planting could affect production of the safrinha corn crop.
Soybeans are trading toward the lower end of their trading range after hitting overhead resistance near the 50-day moving average in the November contract. Weakness from both meal and oil is adding pressure as both products also rejected upward advances and are trading lower at midday.
Yesterday the USDA released supply and demand numbers that were somewhat friendly to the soybean market. The USDA lowered 24/25 ending stocks to 550 million bushels, a 10 mb reduction from August versus an 8 mb that was expected. The drop was largely due to higher crush demand in the 23/24 marketing year that carried over to 24/25. Yield projections were left unchanged at 53.2 bpa.
This week’s Drought Monitor revealed a 7% increase in drought conditions across the nation’s soybean producing regions, bringing the total area affected to 26%. While the impact on this year’s crop may be limited, it’s a development worth monitoring closely in the coming months.
The drought in Brazil has resulted in the driest soil conditions in 30 years in two of the country’s largest producing states, according to EarthDaily Agro. Hot and dry conditions are expected to continue for the next ten days before they begin to improve. Any extended stretch of the current conditions could begin to affect soybean yield and planting of the safrinha corn crop.
Argentina is set for its largest soybean acreage expansion in 15 years, as farmers are expected to increase planted acres by 7.5% from last year. Total planted area is anticipated to reach 17.7 million hectares (43.7 m. acres) according to the Rosario Board of Trade.
The wheat complex is trading higher across all three classes with the Chicago contracts leading the way higher. Buyers are likely leaning on the continued dry conditions in the US Plains and a potential rise in Black Sea aggression.
Reports of a missile attack on a vessel carrying Ukrainian grain in international waters has sparked a call for greater Western involvement in the Russia/Ukraine war. This could be leading to some short covering and an addition of war premium in the wheat complex.
Ukraine’s National Hydrometeorology Center stated that the soil moisture in 70% of the area expected to be planted with winter wheat is nearly depleted, with some areas having almost no moisture at depth up to one meter. This and the continued dryness in the US Plains could affect planting of winter wheat and draw down potential production.
Yesterday’s WASDE report was largely neutral for wheat, as expected. The 24/25 production estimate remained unchanged at 1.982 billion bushels, with the next update scheduled for the September 30 Small Grains Summary report. The US 24/25 wheat carryout was also left steady at 828 million bushels, though the market had anticipated an 8 mb reduction. Globally, 23/24 wheat ending stocks rose from 262.4 to 265.3 million metric tons, while the 24/25 figure held at 256.6 mmt.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
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