TFM Midday Update 7-17-2024

CORN

Corn futures are trading slightly higher at the time of writing – the bounce yesterday and follow through today may be technical in nature. Futures are oversold and may be due for a correction to the upside, however, there has not been any major bullish shift in fundamentals.
Due to the recent rains across much of the Midwest, soil moisture levels should be sufficient for the next week or so, with drier weather expected. Additionally, temperatures are expected to be moderate over the next couple of weeks.
US corn basis is said to be firming, along with those in Brazil and Ukraine, and US corn export values are said to be competitive on a FOB basis. Due to dry and hot conditions in eastern Europe, and Ukraine in particular, Ukraine’s corn yields may decline by 30%-35%, according to the Ukraine Agrarian Council.
According to CONAB, Brazilian safrinha corn harvest is 75% complete, and their estimate of Brazil’s total corn production remains 5-6 mmt below the USDA’s projection.

This morning, August soybeans filled the chart gap left between Friday’s low at 1102 ½ and Monday’s high of 1101. However, at midday soybeans are off their session highs with deferred contracts having traded both sides of unchanged, indicating that this may be a dead cat bounce.
ANEC, a Brazilian export group, is anticipating Brazil’s July soybean exports will reach 10.7 mmt. Additionally, ABIOVE, a Brazilian oilseed processors group, increased their estimate of Brazil’s soybean crop to 153.2 mmt, which is above CONAB’s guess and closer to what the USDA is projecting.
Despite higher crude oil and palm oil values, soybean oil has reversed off early session highs and is trading mostly lower at the time of writing. Along with lower meal prices, this is weighing on soybean futures. US soybean meal is also believed to be overpriced compared to South America by $40-$50 per mt on a FOB basis.

Wheat futures are leading the grain complex higher at midday with double digit gains, reversing from yesterday’s lower close. This may also be a correction from technically oversold conditions.
Egypt is said to have purchased 770,000 mt of wheat in their tender. Russia fulfilled the majority of the deal at 720,000 mt, with Bulgaria supplying the remainder. Both French and Romanian offers were said to be priced much higher, causing them to lose out on the business.
Rostov, a wheat growing area of Russia, is said to have produced 11% of Russia’s total wheat crop last year. According to the Russian ag minister, that area has been affected by drought, floods, and frost, all of which could lead to harvest being down 38% in that region.
The US Dollar index so far today reached the lowest level since late March before recovering a bit. It remains sharply lower at midday and is lending support to wheat futures.

Brandon Doherty