- HEADLINES: USDA report neutral to slightly bearish; Chicago grains follow crude oil to sharp losses; Midday GFS weather forecast wetter in E Midwest.
- Another Russian/Turkey/Ukraine export corridor meeting, USDA July report and Ukraine export rumours.
- We understand that Wednesday’s corridor meeting in Istanbul will only be attended by military personal, no high-ranking diplomats, which suggests that nothing will happen other than parties blaming each other for the war and mined ports. Ukraine will not allow their ports to be unmined.
- There have been news headlines that 6-8 foreign vessels have arrived at Ukraine ports for the transportation of agricultural goods, according to the Ukraine Armed Forces. This is due to Ukraine retaking Snake Island from the Russians. This opens the Bystre Channel for small coasters to move up Danube River with all the other goods that need to sail. Drafts are just 4 meters which means that any tonnages moved will be 2-5,000 mt. And passage is only 6-7 cargoes/day of all goods including steel. This is not a solution for Ukraine moving grain.
- The USDA July Report was neutral to slightly bearish.
- US 2022/23 corn end stocks rose by 70 million bu to 1,470 million bu with soybean end stocks falling by 50 million bu to 230 million bu. WASDE left yields at 51.5 bushels/acre on soybeans and 177 bushels/acre on corn (a record). WASDE trimmed 2021/22 US corn feed/residual use by 25 million bu to 5,600 million bu which raised 2021/22 US corn end stocks to 1,510 million bu. And it raised 2022 US corn production by 45 million bu due to the 400,000 acre expansion in seedings. The net result was 2022/23 US corn end stocks of 1,470 million bu with an average farmgate price of $6.65/bu.
- 2022 US soybean production was cut 135 million bu with 2022/23 exports dropped 65 million bu and crush 10 million bu that left end stocks at an historically tight 230 million bu. With just 1 bushels/acre of yield loss, US 2022/23 soybean end stocks would decline 87 million bu or to a level below pipeline. The average farmgate price was estimated at $14.40/bu. Chicago futures sold off after the report due to the sharp falls of energy futures and the rally in the US$. We see Chicago values as too cheap, and we doubt that last week’s low can be taken out. Chicago values will stay be volatile, but there will be much better sales opportunities ahead. If there was a surprise it was USDA’s drop of China’s old crop soybean imports to 90 million mt, down 2 million. The 2022 US and European growing season is far from finished, this is no place to turn bearish of either corn or soybeans.
- US 2022/23 wheat stocks were raised 12 million bu to 639 million bu as larger production slightly more than offset larger projected exports. The US winter wheat harvest was lifted a modest 19 million bu following an upward revision to harvested area. Combined US spring and durum wheat production is estimated at 580 million bu, vs. 331 Mil last year and vs. the previously implied number of 555 million bu. However, WASDE acknowledged that the US market is competitively priced and boosted 2022/23 exports to 800 million bu, up 25 million from June.
- 2022/23 US HRW stocks are pegged at 265 million bu, down 88 million from last year, HRS stocks are pegged at 126 million bu, down 14 million, with SRW stocks to rise 42 million bu to 136 million. High protein US wheat stocks will be tight.
- Very few changes were made to the world wheat balance sheet. Combined Black Sea production was lowered 500,000 mt as reduced Ukrainian output offset a modest upward revision in Russia. Indian wheat production and exports were left unchanged at 106 and 6.5 million mt, respectively. Both are viewed as much too high, and recall India is now restricting both wheat and flour exports. Wheat’s top priority is measuring the pace of weekly Russian exports from here forward. Note that USDA increased 2022/23 world trade another 900,000 mt to a record 205.5 million mt. A major reshuffling of the global wheat trade matrix will be required immediately if Russia fails to export 3-5 million mt in July and August.
- It is back to monitoring weather and macro market performance. Crude’s $8/barrel collapse this morning has forced selling in all other markets. The midday GFS weather forecast continues to advertise better rain chances in IL, IN and OH July 16-18, but no other model features needed widespread soaking precipitation in any region. US temperatures lean warm/hot into late month.