Today’s Grain Market Update

by Amelia Siroky

DTN reports:

July corn fell 14 1/2 cents Tuesday after Brazil’s Ag Ministry said it reached a deal to export corn to China. New-crop contracts of all three U.S. wheats also closed lower Tuesday, despite ongoing weather challenges in the U.S.

Wheat:

After starting higher early Tuesday, July KC wheat reversed course and finished down 38 3/4 cents at $12.37 3/4, sparked by heavy selling in corn shortly after the 8:30 a.m. CDT open. The bearish turn of events was especially surprising for wheat after USDA’s Crop Progress report confirmed once again the problems wheat is having in the U.S. Late Monday, USDA said 28% of the winter wheat crop was rated good to excellent, up from 27% last week, but still the lowest such rating since the drought of 1989. It sounds odd to say, but Kansas and Oklahoma are under flood watches Tuesday and Wednesday with rain coming down. Unfortunately for winter wheat producers, this week’s rain is too late to offer much benefit for crops, but I have to wonder if Tuesday’s speculative sellers realized that. Further north, USDA said 49% of the spring wheat crop was planted, down from the five-year average of 83% for this time of year. North Dakota is 27% planted and has a drier forecast the next five days, while Minnesota is 11% planted and may catch more rain Wednesday and Sunday. Spring wheat planting north of the U.S. border is also delayed this year with Manitoba suffering similar conditions as North Dakota. One small bearish contribution to Tuesday’s selling may be that eastern Europe has chances for scattered showers this week, an area where crop conditions are more favorable. Only light amounts are expected for France, however. Finally, it is difficult to quantify how much grain is being moved out of Ukraine, either by sneaking to the West or by Russia stealing the grain and selling it themselves. Some movement is likely, but Ukraine still looks like a dangerous place to count on for much grain supply in 2022. Technically speaking, Tuesday’s sell-off in July KC wheat appears to be part of a correction back from last week’s all-time high for a July contract, but prices remain a long way above support near $10.00. The price trends remain up for the new-crop contracts of all three U.S. wheats. DTN’s National HRW Index closed at $12.22 Monday, down from last week’s all-time high of $13.15. DTN’s National HRS Index closed at $12.48, down from its highest price in 14 years.

Corn:

July corn fell 14 1/2 cents to $7.71 3/4 Tuesday, hit by news of an agreement that could pave the way for corn exports from Brazil to China. According to Reuters and Brazil’s Ag Ministry, China and Brazil reached important agreements on phytosanitary requirements which will allow Brazil to export corn to China, pending approval from China’s Ag Ministry. Also hinting at the news, September corn futures in Brazil were trading up 2% Tuesday afternoon. Part of Tuesday’s selling in corn may also have been a late response to USDA’s report that 72% of the corn crop was planted as of Sunday, higher than many expected and not far from the five-year average of 79% for this time of year. Monday’s higher planting progress, however, does not rule out a potential loss of U.S. corn acres in 2022, even lower than USDA’s early estimate of 89.5 million. North Dakota is only 20% planted, coming off more rain and snow on Friday. North Dakota has a drier forecast the next five days with warmer temperatures on the way, but Minnesota will likely catch part of the widespread rain coverage expected Tuesday and Wednesday and both states have another chance of more rain Sunday. Another possible bearish influence on Tuesday’s prices may have been moderate to heavy rains in the forecast for southern Brazil and Paraguay later this week. In central Brazil, however, crops remain chronically dry with no help in the seven-day forecast, so it remains to be seen just how much corn Brazil will have available to sell to China. With Ukraine’s corn production and ability to export grain severely limited in 2022 and South American crops being challenged by adverse weather, the world will be counting on this year’s corn production in the U.S. If USDA is correct about corn having the smallest number of planted acres in five years, it is quite possible demand will exceed U.S. corn production in 2022-23. That may be one of the reasons DTN’s national corn basis is the strongest in ten years at 6 cents below the July contract. In spite of Tuesday’s selling, the price trends remain up for both July and December corn. DTN’s National Corn Index closed at $7.80 Monday evening, a bullish sign of commercial demand. Other commodities were mixed to lower with the Dow Jones futures trading down 115 points. Earlier Tuesday, Dow Jones futures were down roughly 400 points after the Census Bureau reported April new home sales dropped 27% from a year ago.