Both soybeans and corn recovered some of their losses on Friday as markets had clearly reached oversold levels the first three days of the holiday shortened week. At the close we saw July corn up 3, with December corn up 18. July beans were up 17, while November beans were up 9. Harvest pressure pushed wheat lower into the close, with July closing down 13.
At the end of the week last week wheat had officially erased all of the gains seen since the start of the Russian invasion in Ukraine. Of course not all that was lost was war premium, as the situation in the Black Sea remains far from resolved, but reports of high quality and great yields in the Soft Red Wheat Belt, with some decent harvest results out of Kansas have helped to pressure the market.
Soft Red Wheat out of the US is now competitive in the global market, thanks to support in European wheat basis due to uncertainty over crop size ahead of harvest. Heat and dryness across the region has prompted many private analysts to reduce their production outlooks, though the French Ag Minister and other government officials continue to contend production potential remains steady.
Currently wheat spreads indicate the market is comfortable with the crop outlook as it is the only market out of the big three offering carry adequate enough to encourage storage. With harvest just starting, what takes place in the cash market both here in the US and in Europe will give us far better insight into crop size than any private or government estimate.
Of other interest, the G7 summit kicked off in Germany yesterday. The G7 which consists of leaders from Canada, France, Germany, Italy, Japan, UK, US and EU tends to set the tone for global policy. Ahead of the meeting many were concerned members of the EU would pressure the group to abandon its support of biofuels due to the sharp jump seen in food prices.
Germany has especially been vocal in its desire to reduce what it calls food for fuel, but with the US clarifying ahead of the meeting that it would not abandon climate goals because of increased food costs the topic is not expected to even be discussed.
Officials at the G7 did indicate however the high costs in energy has prompted them to relax some of their goals regarding fossil fuel development. Coming into the week's meeting there was a target to eliminate fossil fuel investment by the end of this year. However, now it appears as though that language will be eliminated. Japan is also pushing the group to abandon specific goals targeting electric cars.
Looking ahead we are continuing to monitor weather with better than expected rains falling across much of Iowa, Illinois and Western Indiana over the weekend. While many pockets of dryness remain, the outlook for excessive heat is somewhat limited with above normal precipitation expected from July 6-10 across much of the country.
Officials are expected to kick off another round of negotiations between the US and Iran this week, with hopes to revive the 2015 nuclear treaty. With oil trading near record highs, the desire to accomplish something with these negotiations feels much more urgent than when both sides walked away from the table in March.
We will get updated export inspections this morning with us needing to see around 27 million bushels of soybeans, 57 million bushels of corn and around 14 million bushels of wheat shipped each week to meet USDA expectations. Crop progress will be released at 4 eastern.
We will get updated acreage and quarterly stocks on Thursday, likely keeping markets mostly range bound with a good amount of weak longs retreating last week.
Corn down 7 to 14
Beans up 3 to 11