Written Commentary
MORNING OUTLOOK
Grains are mixed. SN is up 11 cents and near 16.26. SX is near 14.89. SMN is near 400.0. BON is near 82.57. CN is up 2 cents and near 7.93. CZ is near 7.57. WN is down 6 cents and near 11.72. KWN is down 2 cents and near 12.65. MWN is up 6 cents and near 13.22.
US stocks are higher. Crude is higher. US Dollar is lower. Silver, cotton, coffee and sugar are higher. Gold, copper and cocoa are lower.
The big USDA surprise was US and World wheat numbers. US 2022/23 wheat carryout Is down for the 6th straight year. USDA estimate of US 2022 wheat yield could be too high given HRW dry weather forecast and wet US north plains weather could lower US final HRS crop. USDA estimate of India wheat crop at 108.5 mmt appears to be high. India forecast the crop at 105 mmt with many looking at 95-100. India domestic flour prices are record high. Russia 39 mmt wheat export forecast may be too high. Talk of Lower Ukraine exports suggest USDA estimate of Black Sea wheat exports could be 20 mmt or 735 mil bu too high. With most exporters 2022/23 exports max out, this leave US a residual exporter with a carryout of only 619. Higher World freight cost, US Dollar at 20 year highs and talk of even higher wheat prices spells problems for World wheat buyers. Some estimate US on farm wheat price closer to 12.40 vs USDA 10.75.
USDA also surprised trade with a 177.0 US 2022 corn yield. This is still equal to last years record with plantings late and drier and warmer US summer. Some feel given lower South America supplies and lower Ukraine exports, US final corn export could be 200 mil bu higher. This suggest a lower US 2021/22 corn carryin of 1,240 vs USDA 1,440 and lower US 2022/23 carryout. This could suggest a US 2022/23 carryout closer to 750 with USDA estimate of US 2022/23 total corn demand 250 mil bu too low. Current corn futures prices are not yet rationing demand. Some estimate US on farm corn prices closer to 9.10 vs USDA 6.75
Soybean futures price reaction to USDA numbers were mixed with soybean futures higher and soymeal and soyoil lower. USDA lowered US 2021/22 soybean carryout 25 mil bu due to higher exports. USDA raised US 2022/23 soybean crush 40 mil bu to a new record and exports 60 mil bu. Still the 51.5 yield increase US 2022/23 carryout to 310. There is already talk of lower US acres due to wet weather increase US north plains prevent plant acres 1-2 million. USDA estimate of US 2022/23 on farm price of 14.40 was a new record for May. USDA also increased 2023 Argentina crop 9 mmt from this year and Brazil 24 mmt. They did increase China 2022/23 to 99 mmt with some asking if their demand will increase given strict Covid lockdown policy.
Some estimate US 2021/22 soybean carryout closer to 175 and 2022/23 near 100. Brazil will be out of the export market August 1. August- Jan World soybean imports demand is normally 80 mmt or 2,940 mil bu. US cannot satisfy that even with a record crop. Some estimate US average farm soybean price closer to 17.70.
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