TFM Morning Update 07-10-2023

CORN

The corn market is mostly higher this morning as it continues to consolidate following the USDA’s surprise reduction in acres and ahead of Wednesday’s USDA July supply and demand update.
Expectations call for increased 2023 corn production in Wednesday’s report. The average estimate is for a 15,149 bil. bu. crop versus 13,730 in 2022, with an average yield guess of 175.8 bpa versus the USDA’s June estimate of 181.5 bpa.
The average guess for 2022 ending stocks is a reduction of 42 mil. bu. from the June estimate to 1,406 mil. bu., with an average guess for 2023 ending stocks coming in at 2,166 mil. bu.
The managed funds were big sellers following the USDA’s Stocks and Acreage report. Friday’s Commitment of Traders report showed as of Wednesday, July 5, Funds sold 71,000 contracts to flip their positions from net long 53k to net short 18k contracts.
The most current US 6 – 10 day forecast calls for mostly normal precipitation in northern Corn Belt with slightly above in the southern Corn Belt, southern Plains and Southeast. While below average temperatures are called for in much of the central Corn Belt and Minnesota, Wisconsin, Nebraska, and Kansas. The extended 8 – 14-day forecast shows above normal temperatures moving in for most of the US with normal precipitation in Midwest and slightly above normal precipitation in Southeast.

Soybeans are higher across the board led largely by soybean oil with 1.42 cent gains in December, with meal up $4.50 per ton, as warm temperatures are expected to move in across the US in the 8 – 14-day forecast.
The market may likely continue to consolidate ahead of Wednesday’s USDA July WASDE report. The trade is expecting slightly lower 2023 production at 4,250 mil. bu. versus 4,276 for 2022 with a 51.4 bpa compared to 49.5 last year.
The average trade guess for 2022 ending stocks is up 5 mil bu. at 235 mbu. versus the USDA’s June estimate of 230, largely due to reduced export demand. As for 2023, the average trade estimate is for 206 mil. bu. due to lower acreage and production.
In Friday’s COT report, managed funds were sellers of soybeans, but not to the extent of corn. The report showed Funds sold a total of about 10,000 contracts, reducing their net long to an estimated 89,000 contracts as of Wednesday, July 5.

The wheat market is mixed as we come out of the overnight session with Chicago and K.C. mostly higher and Minneapolis mixed with the deferred contracts trading lower. While nearby contracts are higher.
Trade estimates for Wednesday’s USDA report have the 2023 US wheat crop at 1,683 mil. bu. versus June’s 1,665 mil. bu. While 2023 total Winter Wheat is estimated at 1.154 mil. bu. versus 1,136 mil. bu. The first HRS estimate is near 477 mil. bu. versus 446 mil bu. last year.
The average trade guess for 2022 ending stocks for all wheat is down 15 mil bu. to 583 mbu. versus the USDA’s June estimate of 598 mil. bu. As for 2023, the average trade estimate is for 565 mil. bu., up 3 mil. from June’s estimate.
Last Friday’s COT report didn’t show a large overall change in the fund’s Chicago wheat position. In total, as of Wednesday, July 5, the funds added 2,000 contracts to their short positions bring their total net short to 54,000 contracts.
The expected moisture in the 6 – 10 day forecast in the southern Plains may add a level of concern for additional delays and quality issues for any unharvested HRW wheat in the region. While there remains a level of concern for wheat crops in Canada, Central Russia and Northern China.

Scott Masters