TFM Morning Update 07-13-2023

CORN

December corn traded both sides of unchanged overnight and is now near the top of its 9-1/2 cent range as it recovers somewhat from yesterday’s bearish USDA report.
The USDA lowered the potential corn yield to 177.5 bushels/acres (-4.0 bu/acre), just above market expectations, but did not adjust the demand side of the balance sheet to establish a new carry out projection of 2.262 billion bushels for the 23/24 marketing year. This total was in line with analysts’ expectations. If realized, 23/24 ending stocks and stocks/use ratios would be the highest in 7 years.
The USDA lowered old crop export demand by 75 million bushels, and traders in the market pressured corn prices feeling that a projected new crop export demand of 2.100 billion bushels, up 450 mb from 22/23 projections, will be difficult to reach at current corn price levels.
Weekly ethanol production reported by the EIA came in below expectations and slipped to 1,032k barrels/day from the previous week’s 1,060k barrels/day. Ethanol stocks also rose 1.8% to 22.658M barrels.
The Funds were active sellers yesterday following the USDA report, selling an estimated 10,500 contracts. They are now estimated to be short 26,000 contracts.

The soybean complex is trading higher this morning with traders likely covering some short positions after yesterday’s bearish USDA report, with soybean meal and oil also trading higher.
The USDA surprised the market by adding 25 mb to the 22/23 carryout bringing the total to 255 mb (versus 232 mb expected) and only dropping the 23/24 carryout numbers 50 mb from last June to 300 mb, with an estimated yield of 52 bpa. Trade expectations were about 200 mb for 23/24 carry out with a 51.3 bpa yield.
South American production for 22/23 was left unchanged in today’s report with Brazil’s crop estimated at 156 mmt versus 156.2 mmt expected, and Argentina’s crop estimated at 25 mmt versus 23.6 mmt expected.
Funds were active sellers of soybeans following the bearish USDA report, selling an estimated 10,000 contracts. They are now estimated to be long 94,000 contracts.
Export sales will be announced later this morning for soybeans and are expected to range from 10 – 30 mb.

The wheat market is also posting a bit of a recovery from yesterday’s downturn with Chicago and Minneapolis mostly higher, and KC mixed.
In yesterday’s report, the USDA estimated 23/24 all wheat production at 1.739 bb versus expectations of 1.677 bb, and 1.665 bb last month. 22/23 wheat carryout was estimated at 580 mb versus expectations of 583 mb, and 23/24 carryout came in at 592 mb when the trade was looking for 565 mb.
The USDA estimated the winter wheat yield at 46.9 bpa, up 2.0 bu from last month’s projection, and for reference, last year’s average yield was 47.0 bpa.
Like corn and beans, funds were active sellers in Chicago wheat, selling an estimated 9,000 contracts. They are now estimated to be short 59,000 Chicago wheat contracts.
Export sales released later this morning are expected to range from 8 – 16 mb.

Scott Masters