DTN reports:
Except for rain in the western Plains, most crop areas stayed warm and dry over the weekend, favorable for planting progress. New-crop contracts of corn, soybeans and all three U.S. wheats suffered big losses Tuesday with scattered chances for rain this week that continue to favor western areas.
WHEAT:
July KC wheat fell 35 1/2 cents to $7.83 3/4 Tuesday, a volatile showing in the month of May with an undetermined monthly conclusion for one more day. The July contract ended April at $7.76 1/4, achieved a new five-month high close on May 15 as traders were shown the extent of drought damage in the southwestern Plains, both by USDA and by the 2023 Hard Winter Wheat Quality Tour. Even with a smaller HRW wheat crop expected in 2023 however, demand for U.S. wheat continues to be disappointing and Tuesday’s prices are back near May’s starting point. The western Plains received beneficial rains the past several days with more expected in some of the driest areas of the southwestern Plains. Heavy rain amounts around the Texas Panhandle created problems with flooding and that will remain a concern later this week, when more rain is expected. Tuesday afternoon’s Crop Progress report will likely show a small increase in the good-to-excellent rating for winter wheat, last seen at 31% with 61% of the crop headed. There will also be interest in U.S. spring wheat planting progress Tuesday afternoon. Last week’s overall progress of 64% could jump into the low 80s Tuesday, but there continues to be a risk all 10.57 million acres that USDA expects will not be planted.
Of all the major wheat regions, Europe was in good position to benefit from the war in Ukraine in 2022-23 and exports are up 10% from the previous season. However, Europe’s tight ending stocks estimate of 11.06 million metric tons (mmt) or 406 mb in March was boosted to 16.16 mmt or 594 mb in May, also experiencing a disappointment of demand that has September milling wheat in France near its lowest level in over a year at 220.25 euros per metric ton or roughly $6.44 a bushel. Meanwhile, Russia’s attacks on Ukraine are not letting up and included damage to the port of Odesa over the weekend, one of the ports supposedly protected by the Black Sea Grain Initiative. Also ignored by traders, Reuters reported damaging rains on China’s wheat crop in Henan, hurting quality shortly before harvest.
With wheat prices showing difficulty sustaining any rally, the trends are sideways for July KC wheat and September Minneapolis wheat and remain down for July Chicago wheat. DTN’s National HRW Wheat Index of cash prices closed at $7.88 Friday, while DTN’s National HRS Wheat Index closed at $7.86.
CORN:
December corn closed down 9 1/4 cents at $5.25 1/4 Tuesday, quickly giving back a chunk of last week’s 34 3/4-cent gain as traders seem less concerned about the early threat of dry weather in much of the Midwest. The western Plains received scattered showers over the weekend with the heaviest amounts in the southwestern Plains where drought has been the most intense. The rest of the Corn Belt was warm and mostly dry, favorable for planting to be well over 90% finished in Tuesday afternoon’s Crop Progress report. It should also have been a good week for North Dakota to improve on last week’s planting progress of 32%. Tuesday’s report will also show the first good-to-excellent rating for corn of the new season, likely a favorable number to start, but more rain coverage will be needed.
The demand side of corn has relied heavily on domestic feed use in 2022-23 and that remains true. USDA said earlier Tuesday, 51.7 million bushels (mb) of corn were inspected for export last week, good movement on the week, but overall sales are down 36% from a year and continue to come up against tough competition from Brazil.
Brazil’s corn production remains on track to achieve a new record high in 2023. This week’s forecast remains mostly dry as it usually is this time of year, but the southern safrinha crop received some scattered rains over the weekend. Similar to corn prices in the U.S., July corn on Brazil’s Bovespa exchange was down 2.6% Tuesday to the U.S. equivalent of $4.68 a bushel, not far from its lowest spot prices in over two years. Technically, last week’s rally in December corn looks like a normal rotation in a trend that remains down for both July and December corn. DTN’s National Corn Index was priced at $6.39 Friday evening, 35 cents above the July futures. In outside markets, Dow Jones futures were trading modestly lower as traders wait to see if Congress will approve the proposed debt ceiling measure.
