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Ag Market View for July 17.23

SOYBEANS

The soybean complex was mixed as concerning weather forecasts was largely offset by weaker than expected demand.  Soybeans were $.02 – $.07 higher, meal was $7 – $9 higher, while oil was 20 – 40 lower.  Resistance for Nov-23 soybeans is at $13.92.  NOPA crush from June-22 at only 165 mil. bu. was in line with June-22, however well below May-23 at 178 mil. and below expectations of 170 – 173 mil.  Total implied crush for June is 174.5 mil. bu. bringing YTD crush to 1.858 bil. bu. up .6% from YA, in line with the current USDA forecast.  Final crush for 2022/23 that ends in Aug-23 is likely to be within 10 mil. bu. of the current USDA est. of 2.220 bil.  With the lower production, oil stocks slid to 1.690 bil. lbs., below expectations of 1.816 bil.  Soybean export inspections at 6 mil. bu. were well below the level needed to reach the revised USDA export forecast.  YTD inspections at 1.80 bil. are down 5% vs. the USDA forecast of down 8%.  Money managers were net sellers of 6.4k contracts of soybeans, while being net buyers of 7,653 oil and 1,378 contracts of meal.  Safras & Mercado est. Brazilian 2023/24 soybean production at 163.2 mmt, very near the USDA forecast, as acres are expected to expand 2.5% to a record 45.6 mil. hectares. 

corn stalks

CORN

After trading nearly $.13 higher overnight corn prices drifted back closing the session $.07 – $.08 lower.  The overnight strength was largely tied to the Russia formally exiting the Black Sea Grain Initiative.  The higher trade was short lived as many concluded the collapse of the trade pact was likely already discounted by the market.  Since the BSGI was first implemented in Aug-22, nearly 33 mmt of Ukrainian ag. products have been shipped thru the corridor.  Corn and wheat shipments, 17 mmt and 9 mmt respectively, made up nearly 80% of corridor shipments.  With the Black Sea cut off, exports will be forced to flow thru Eastern Europe or along the Danube River.  For 2023/24 MY the USDA is forecasting corn exports at 19.5 mmt down 30%, while wheat export are expected to drop 38% to only 10.5 mmt.  The market seems confident these reduced export volumes can be shipped via the alternative routes.  The UN/Turkey will likely continue to pressure Russia to reopen the corridor.  Resistance for Dec-23 is at its 50 day MA of $5.30 ¼.  Last week MM’s were net sellers of nearly 45k contracts of corn, extending their short position to just over 63k contracts, their largest short position in nearly 2 months.  Index funds sold nearly 22k contracts of corn, marking the the 2nd consecutive week both MM’s and index funds were healthy sellers in corn.  Export inspections at only 14 mil. bu. were below expectations.  YTD inspections are down 33% from YA, in line with the revised USDA forecast.  AgRural estimates Brazilian 2nd corn harvest at 36%, down from 53% YA.  Their 2nd crop production forecast at 102.9 mmt is well above Conab’s est. of 98 mmt. 

WHEAT

Prices were lower in all 3 classes with MGEX down $.02 – $.06. Chicago down $.06 – $.08, while KC was $.12 – $.14 lower.  After surging to a 3 week high overnight, Chicago Dec-23 settled back near its 50 day MA support at $6.73.  Similar trade action in Dec KC pulling back to its 50 and 100 day MA support near $8.20.  MGEX Dec-23 traded to a 3 ½ month high just over $9 before retreating.  Export inspections at only 9 mil. bu. were below expectations.  SovEcon expects Russian grain exports to reach 5.3 mil. mt in July, up from 4.0 in June.  IKAR estimates Russian Black Sea 12.5% protein wheat was trading $228/mt FOB at the end of last week, down from $231 the previous week. Winter wheat harvest has likely advanced to 55 – 57% complete vs. the historical average of 69%.  Last week MM’s were very light buyers of both Chicago and KC wheat.

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