TFM Morning Update 07-12-2023

CORN

Corn is trading higher and near the top of its 5-cent range this morning in the December contract as traders ready themselves and cover short positions ahead of today’s 11 am USDA WASDE report.
Expectations for today’s USDA report are for corn yield to drop to 176.3 bpa, down 5.2 bpa from the June report. Despite the yield drop, the additional acres and possible demand adjustment will likely keep new crop corn carryover near 2.250 billion bushels on the report. The average trade guess for the 2022 crop ending stocks is 1.424 bil. bu, versus 1.452 bil bu in June.
The weekly EIA report on ethanol production will be released today at 9:30 CST with some looking for weekly production to be down from last week’s pace of 1,060k barrels/day.
Over the next 10 days, decent rain is expected through eastern Nebraska, southern Iowa, Missouri, and into Illinois and the eastern Corn Belt. While the north/central Midwest and northern Plains are expected to see much lighter amounts.

Soybeans continue their march higher ahead of today’s 11 a.m. USDA report with soybean meal and oil also higher. Soybean oil is likely getting a boost from higher Malaysian palm oil.
The average trade guess for 2022 carryover is up 2 mil bu. at 232 mbu versus the USDA’s June estimate of 230, largely due to reduced export demand. Due to lower acreage numbers from the June 30th report, the average trade estimate for 2023 carryover is 203 mil bu with a 51.3 bpa, versus June’s 350 mil bu estimate.
South American basis is improving which is allowing US soybeans to be more competitive in the world market, though they remain above SA offers.
According to Refinitiv, China has increased soybean imports from Brazil in response to concerns of tight US supplies. China’s total Feb – June soybean imports from Brazil were 40.74 million tons versus 31.6 mil tons and 38.6 mil tons for 2022 and 2021 respectively.
It has been rumored that China bought 10-14 cargoes of US soybeans off the PNW for October delivery for their reserves. Though at this time there remains no confirmation from the USDA and New Crop commitments continue to be historically low.

The wheat complex is trading mixed this morning with Chicago lower, Minneapolis mixed, and K.C. near unchanged.
Average trade estimates for today’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 mb versus 1,136 mb. The first HRS estimate is near 477 mb versus 446 mb last year. The average trade guess for 2023 wheat ending stocks is up 9 mb to 571 mb versus the USDA’s June estimate of 562 mb.
In its first outlook of the year, the French agricultural ministry estimated the country’s soft wheat harvest at a 2-year high of 35 mmt, 1.3 mmt higher than last year. Yield was also reported to be the highest since 2019.
As the Black Sea Grain Initiative is set to expire next week, Russia has been targeting the Ukrainian port city of Odessa with drone attacks. Though the attacks have largely been neutralized with relatively minor damage reported. Additionally, the expiration of the BSGI will likely make it difficult for Ukraine to reach its export targets.
According to Ukraine’s agricultural ministry, the country’s grain exports for the 23/24 season as of July 12, rose to 894k tons versus 598k tons last season. With wheat exports double and corn up 22% versus year-ago levels.

Scott Masters