- HEADLINES: Chicago soybeans mark record summer prices while July corn breaches 50-day moving average.
- Chicago agriculture futures have been sharply mixed through Thursday’s trade. Chicago wheat futures have been the downside leader and were down as much as 20-25 cents early this morning on Ukraine/Russia news, but the market has recovered, and losses have been cut to just a few cents at midday. July corn has been up 15 cents and pushed above the 50-day moving average.
- Soybean futures have once again charged ahead into new contract highs, with July briefly trading over $17.78/bu (+38 cents) while November has been over $15.80 (+12 cents). On a nearby basis, spot soybean futures have traded at the highest price since September 2012. We note that high occurred in September futures, just ahead of expiration. Today’s high in July soybeans marks a record high price that any July contract has ever traded at, and never before has a November contract ever traded above $15.80 in the month of June.
- Chicago brokers estimate that funds have bought 2-3,000 contracts of wheat during the day, have been big buyers of 7-10,000 contracts of corn, and buyers of 10-12,000 soybean contracts. In the soy product markets, funds have bought 3-5,000 meal contracts and are flat in the soybean oil market.
- The FAS Export Sales report showed that corn export sales last week rose to a 4-week high of 11 million bu, with weekly exports of 54 million bu. Old crop export commitments of 2,343 million bu are down 14% from a year ago on sharply lower outstanding sales, but still the second largest commitment figure on record. New crop corn sales are off 62% from a year ago as world grain traders anxiously hope for a summer decline in US/world prices.
- In wheat, exporters sold 17 million bu of wheat for the 2022/23 marketing year that started on June 1. Combined old/new exports totalled 13 million bu.
- Exporters also sold 16 million bu of old crop soybeans and exported nearly 18 million bu. Total export commitments now stand at 2,203 million bu versus the May WASDE export forecast of 2,140 million. The USDA is likely to raise the annual export forecast in Friday’s WASDE report. We have long held an export forecast of 2,200 million bu, but even our more bullish forecast looks to be in danger of being too low. New crop soybean sales reached a 13-week high of 22 million bu, increasing the new crop sales volume to a record 467 million bu.
- The midday GFS weather forecast is consistent with prior runs with the model offering a change in the US weather pattern as a high-pressure ridge builds/holds across the Central US due a slowing/split of the jet stream. This looks to be the new summer weather pattern which is consistent with a La Niña year. Extreme heat will build from south to north with a below normal Central US rainfall pattern starting after the weekend. Immature crops can withstand this pattern initially, but beyond the next 10 days, the pattern will become adverse. Our drought concern is building. The GFS forecast has had a tropical system in the 12-15 day period that we have low confidence in. Long range forecasts are poor predictors of tropical storm systems.
- Tight Midwest cash corn/soybean supplies (and strong and rising cash basis bids) warns against being short July futures heading into first notice day in just 3 weeks. Futures will rise to cash bids. And the threat of a summer Central US drought will underpin Chicago new crop futures. Amid a world that is extremely short grain/oilseed stocks, any new crop yield loss would be explosive for Chicago. Do not be short, the upside price risks are considerable. End users hope for a bearish USDA report for new purchases.