Morning Comments July 1, 2022

Grain

Though the USDA's numbers could have been considered neutral in the case of feed grains and even bullish in the case of beans, continued macroeconomic pressure took us down to new multi-month lows in corn and wheat. At the end of the day we saw July wheat down 47, with Minneapolis and Kansas City wheats off 35 or so. September corn closed 35 lower, with December down 34, while August soybeans were down 11 with November down 20.

Yesterday's USDA report numbers came in relatively close to pre-report expectations in corn, with planted acreage up slightly and quarterly stocks within single digits of trader guesses.

Looking at a breakdown of corn stocks numbers shows farmer selling in the third quarter of the marketing year was nearly non-existent as we went from the farmer having the smallest share of stocks as of March 1st since 2013 to the farmer holding over 48% of current available supply, up from last year's 42%.

The biggest stocks gains were seen in Illinois, Indiana, Michigan, North Dakota, and Ohio. In Illinois the farmer is estimated to be holding 75 million bushels more than last year. While in Michigan stocks are up 32 million from a year ago, with on farm bushels up 20 million. Overall stocks are down year over year in Iowa, Kansas and Minnesota, though on farm stocks are up in each state.

With soybeans stocks numbers were mundane, coming in as expected and showing the majority of bushels in the hands of commercials. The pace of off farm disappearance from March 1st to June 1st indicates a similar trend in beans as seen in corn, with farmer selling nearly non-existent in the quarter.

Acreage was where the biggest surprise came in, with acres down 2.655 million from March intentions and 2.146 million lower than pre-report estimates. The bulk of the reduction was seen in Minnesota, North Dakota and South Dakota, where poor spring weather had many farmers still working on getting their crop planted when the majority of the survey was done.

The USDA estimated upwards of 15.8 million acres of soybeans and 4 million acres of corn were unplanted as of June 16th, prompting them to plan on resurveying the Dakotas and Minnesota throughout July. The resurvey will be released with the August supply and demand update.

Wheat figures came in close to expectations as well, with the only major surprise being the limited loss in spring wheat acres after the aforementioned wet spring in the Dakotas and Minnesota.

Outside of those USDA figures, we got updated export sales numbers for the week, with soybean sales negative for old crop and relatively limited for new. Corn sales were a marketing year low in old crop, selling just over 88,000 tonnes on the week, new crop sales were poor as well. Wheat sales were decent and inline with expectations as the recent sell off in futures has made US supplies more palatable in the global market.

Weather-wise it appears as though the first half of July will be relatively wet for much of the Corn Belt, with Northwest flow coming into play and the ridge currently parked over Missouri moving to the west. Models are now trying to paint the picture of a wet pattern beyond the next two weeks, into the end of the month, but confidence remains low in these forecasts because of the continued presence of La Nina.

Outside markets continue to struggle, with the S&P 500 having its worst first half of a year since the Nixon administration, losing 21%--though now only retreating to last March's trading range. Many commodities have been caught up in this sell off, with much of the narrative starting to shift from runaway inflation to an economic slowdown. Historically speaking, these types of transitions are accompanied with sharp sell offs in commodities, though many are still trying to contend this year is different than the others.

Looking ahead, we're heading into a long weekend with markets closed Monday for the Fourth of July holiday. Weather will continue to be the dominating factor over the weekend, though as it stands currently the lion's share of the Corn Belt will see inch plus rains over the next 10 days.

Corn up 3 to 5

Beans down 5 to 9

Friday, July 1st

  • Normal close for Grains and Livestock
  • MID-CO staffed until 4:30 p.m. CST

Sunday, July 3rd

  • No evening trading session

Monday, July 4th INDEPENDENCE DAY 

  • MID-CO and AgriVisor CLOSED
  • No evening trading session

Tuesday, July 5th

  • Grain and Livestock resume trading at 8:30 a.m. CST