A cooler forecast, ideas we may be closer to resuming exports out of Ukraine and weakness in Chinese commodity values pressured the markets throughout the day yesterday. At the end of the day we saw Chicago wheat down 59 cents in the July, while Kansas City was down 64 and Minneapolis was 52 lower. July corn closed down 24, with December 29 lower, while July beans were down 21 with November off 27.
Reports of a Turkish delegation traveling to Moscow this week got the attention of traders yesterday as this is viewed as continued progress when it comes to reopening Black Sea ports for grain exports. However, continued aggression in the eastern regions of Ukraine are beginning to make their way south towards Mykolaiv, an important river port city two hours to the north and east of Odessa.
Reports of missiles hitting the city, with unsubstantiated claims of damage to port infrastructure resulted in a 30 cent pop in wheat just this morning.
Concerns over how Russia will address Lithuania when it comes to their adhering to EU sanctions remain as well, with worries an escalation in the region could prompt a far greater conflict.
Outside of what is happening in Ukraine, traders continue to monitor weather and its impact on crop conditions. This week's stretch of 90+ degree heat across much of the Corn Belt has not been accompanied with much in the way of moisture, prompting some to worry that conditions will start to go backwards quickly.
While the heat is expected to break late in the week, with normal to below normal temperatures expected next week, the lacking moisture is expected to remain, with concerns of rapid drought development possible from Southern Illinois and Indiana to the south.
Crop conditions in last night's crop progress report showed a slight decline in both corn and soybean conditions, with ratings coming in as expected at 70 and 68% good to excellent respectively. Planting of soys, corn and spring wheat is basically wrapped up, with a quick catchup seen in spring wheat emergence thanks to recent moisture and warmth in the region.
Weather elsewhere is relatively benign with some concerns in portions of China, and pockets of drought in parts of Europe, though a widespread swath of concern at this point in the growing season remains unseen.
Brazil's Agroconsult increased their soybean production estimate yesterday on increased acreage. Total production estimates had sunk to well below 120 mmt throughout the growing season, with some estimating production below 110. It appears the industry consensus is now closer to 125-130 mmt, with the cash market indicating plentiful supplies are available in both the north and south.
France's Ag Minister tried to put concerns over significant losses in production at ease yesterday as well, saying the recent stretch of hot and dry weather in the country and subsequent downgrades in condition ratings are unlikely to result in major losses to yields.
Weekly export inspections came in lower than needed across the board, with soybean shipments coming in at a 2 week low, while corn loadings fell to a 5 week low. China was in for just over 13 mbu of US corn and is now running around 209 million bushels lower on shipments out of the US than they were last year at this time.
Looking ahead we are watching what is happening in crude as that market has seemingly turned, losing nearly $5 overnight and trading below the 100 day moving average for the first time since January.
Talk of worry over a global economic slowdown remain, with China continuing to struggle with maintaining its Covid Zero policy and keeping its economy afloat. Meanwhile all points elsewhere are seemingly dealing with multi-decade highs in inflation and uncertain central banks trying to contain consumer costs.
News will be limited today, President Biden is expected to announce a national gas tax holiday much to the chagrin of any traditional economist. Weather will dominate as well with the 11-15 day forecast showing some much needed moisture expected to stretch across much of the country. Seeing confirmation of that as models roll forward will be absolutely key.
Corn down 5 to 7
Beans down 15 to 20