Early strength in ag markets did not last Friday as soybeans, bean oil and wheat led the way lower. Bean oil was pressured by the fall in canola and crude oil futures. Wheat and corn markets rebuffed early strength to finish lower for the second straight day. Soybean meal futures were able to weather the bearish storm on the heels of big new-crop export sales, but slipped late to finish in the red.
WHEAT:
Wheat futures plunged to end the week, led by Minneapolis December following its seven consecutive higher settlements. There was not a whole lot of fresh news to drive markets, but each of the three had become overbought and likely due for a correction. One constant has been the cheap Russian wheat offers with the FOB value still at $217 mt as it has been for the last few weeks. There is a lack of wheat tenders to end the week on Friday. Open interest in Chicago wheat has fallen about 60,000 contracts in the last few weeks, an indication that funds have been exiting their large short position. In other news, dryness is still a big problem in the Black Sea, Argentina and the U.S. Southern Plains. There is some rain on tap for Argentina, which should help. The Buenos Aires Exchange pegs the Argentine crop at 18.5 mmt, saying recent showers helped. There is more talk of the quality issue with French wheat, with a much larger portion of the crop than is typical with low test weight and low protein. Ukraine, despite the ongoing war, continues to be a force in exports with the 2024 season July to June so far, seeing Ukraine export 7.5 mmt of grain –up from just 4.9 mmt a year ago. Of that total, they have shipped 4 mmt of wheat. Spring wheat harvest in the U.S. is moving to the finish line, with western yields being worse, along with those of Canada. Winter wheat planting in the U.S. is in the early stages, but dryness is a problem with heat and dryness expected over the next 10 days. All three wheat markets are again testing the 50-day moving averages, with a close below likely to result in more selling. DTN’s National HRW Index closed at $5.28 and 61 under the December contract.
CORN:
December corn futures rebuffed early morning strength to finish lower Friday, landing the week right at the 50-day moving average. There is little doubt the continuing plunge in crude oil and sharp fall in equities added to the bearish market action. The weakness came despite good new-crop export sales of just under 72 million bushels (mb), with nearly half of that destined for number one customer Mexico. In the old-crop slot, there was a net cancellation, but with census exports it appears USDA will need to raise old-crop export sales with just two days left in the crop year. The corn harvest is in the early stages, but late-season warmth and dryness could be pulling yields lower. Early harvest has begun in southern Illinois, Ohio and Missouri, with some reports that southern Nebraska early dryland harvest is resulting in some record yields. Thursday’s drought monitor showed expanding drought in the Eastern Corn Belt and especially Ohio, along with the Delta and Southern Plains. Midweek, we saw no less than three firms post yield revisions, with each of those predicting a record corn yield. Ag Resource was the latest to report and on Friday pegged the corn yield at 181.1 bushels per acre (bpa) — still a record, but lower than others. U.S. corn FOB values are now a bit less competitive, with Ukraine and South American offers near parity. In an overnight tender, South Korea’s FLC did purchase 68,000 metric tons (mt) of U.S. corn for October. EIA’s weekly petroleum status report revealed ethanol production at 1.061 million barrels per day (bpd) last week, but still up nearly 5% from a year ago. It is very possible corn for ethanol use could be revised higher on next Thursday’s USDA report. Brazil’s first-crop corn planting is in the early stages, but it is much too dry in some key corn areas. Argentina’s corn harvest is now complete, but the Buenos Aires Exchange says Argentine farmers are likely to plant 17% less area to corn this coming year in an effort to avoid the leafhopper problems of this past year. Funds have been slowly exiting their once-record net short in corn, but as of midweek were thought to be holding a short of over 200,000 contracts still. DTN’s National Corn Index was priced at $3.80, 31 cents below the December futures.
