Over the weekend, there was good rain in the Dakotas and parts of the northern Midwest. However, several key growing regions appeared to get little to none of this moisture.
The 8-14 day forecast does have above-normal precipitation for the whole Corn Belt. But the key will be whether or not it materializes.
CFTC data showed that funds were buyers of 140,000 grain contracts (corn / soy complex / wheat) as of last Tuesday. This now puts them net long corn (as well as soybeans).
This afternoon’s Crop Progress report is expected to show another decline in corn crop ratings. Traders look for a 2%-4% reduction in the good to excellent category.
As of June 17th, CONAB said 5.3% of Brazil’s second crop (safrinha) corn had been harvested. This is 5.8% behind last year’s pace.
Higher palm oil overnight is supporting soybean oil, which has reversed off of last week’s low. With both oil and meal higher at midday, soybeans are receiving a boost as well.
There are concerns about vegetable oil exports out of Ukraine, with uncertainties surrounding the Russian coup, as well as the potential closure of the Black Sea export corridor in July. This may also be supporting soybean oil.
This afternoon’s Crop Progress report is expected to show another decline in soybean crop ratings. Traders look for a 3%-4% reduction in the good to excellent category.
India’s oilseed exports are anticipated to increase by 10%-15% this fiscal year due to expanding acreage. For 22/23, their oilseed exports rose by 20%. There is still a question, however, as to what effect El Nino may have on the crop down the road.
Strength in the wheat market this morning may be tied to a mutiny by the Wagner group against Russia. However, at this time, it appears they may have made a deal, because the group heading towards Moscow has since turned around and went back to Ukraine. This does still raise questions about the war, and ultimately, what it will mean for wheat exports.
Managed funds are still net short Chicago wheat. With the uncertainty of global weather and geopolitics, the market may also be seeing some short covering today.
Matif wheat gapped higher on the open, likely for the same reasons mentioned above. In any case, this is also supportive to US futures. This is also despite the fact that some rains hit the dry areas of northern Europe over the weekend.
There is still question as to how much Chinese wheat was damaged or downgraded due to the heavy rainfall a few weeks ago.
Russia’s wheat export tax will reportedly be reduced from 2,613 rubles (per ton) to 2,473 rubles, according to their agriculture ministry.
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