- HEADLINES: Row crops up sharply; Wheat sags; Extended US forecast stays hot/dry.
- Chicago ag markets are mixed, with corn and soy sharply higher and wheat down on profit taking in Chicago, KC and European wheat futures amid headlines still hopeful for the creation of an export corridor in Ukraine. Yet, Ukraine’s Deputy Admin of Agrarian Policy stated that combined grain exports in 2022/23 would be no larger than 2 million mt/month if Russia’s blockade remains in place. Ukraine has NOT been invited to participate in Wednesday’s meeting in Istanbul, and so there is nothing that come from Turkey/Russia that will be accepted by Ukraine. Most importantly, Russia requires the de-mining of ports and inspections of vessels by Russia, both of which are nonstarters.
- FAS and FGIS continue to undercount US corn, soy and even wheat shipments as evidenced by updated Census data released this morning. Official US corn exports in April totalled 275 million bu, vs. FGIS shipments of 241 million bu. This 14% discrepancy is historically large for April and is mostly a function of enlarged/record demand from Canada and Mexico. Canada in April imported 21 million bu of corn from the US, and since Sep 1 has imported a record 193 million bu. Note that USDA pegs total 2021/22 Canadian corn imports at just 150 million bu. This alone warrants a modest hike to the USDA’s US annual export forecast. Cumulative Sep-Apr Census corn exports are 290 million bu above what has been reported by FGIS.
- Census soy exports in April totalled 134 million bu, 13% above FGIS and 84 million above last year.
- Official US wheat exports in April were 66 million bu and cumulative Jun-Apr exports rest at 753 million. Oddly, this is 39 million bu above total commitments (shipments plus outstanding sales) as of May 26 as reported by the USDA’s FAS. The message is that US corn and soy export demand is being undercounted by the trade, and wheat shipment data this year suggests that even weekly sales/commitments data in wheat is unreliable.
- We maintain a 2021/22 US corn export forecast of 2,700 million bu, vs. USDA’s 2,500. 2021/22 US soy exports are projected at 2,200 million bu, vs. USDA’s 2,140. USDA’s 805 million bu old crop wheat number looks correct.
- Cash markets worldwide continue to reflect the rising burden being placed upon exporters in the US, Europe, and S America to meet global food consumption needs. It remains that Argentine corn is not reliably offered into the world marketplace beyond September. EU cash barley is now quoted $60/mt above US corn, and EU cash wheat has been unwavering at $430-440/mt. Ukrainian headlines along with the looming Northern Hemisphere wheat harvest have provided weight to the market, but that seasonal lows will in wheat be scored at $10.40+, Sep Chicago, is noteworthy.
- The midday GFS weather forecast is consistent with the morning run in projecting a rather binary pattern into the latter part of June. Mild/wet conditions will persist across the Plains and Midwest into the coming weekend. An abrupt shift to warm/hot temperatures and near-complete dryness unfolds thereafter as strong high pressure ridging expands aloft the S Plains, Delta and Midwest. The mean position of the jet stream shifts northward into the far N Plains/S Canada, and Midwest precipitation Jun 12-22 will be confined to scattered showers in pockets if IA, N IL and N IN.
- We do note that the GFS forecast features the season’s first major Gulf storm Jun 23-24. Confidence so far out is low, but it will be difficult to predict mid-June’s upper air pattern until the existence/path of this storm is known. The return of regular Midwest rain will be needed by early July.
- A close above $7.70, July, allows bullish momentum to return to Chicago corn. And overall, the market’s bullish reaction to highly rated crops is important. The tolerance for weather adversity this is season is zero, while extended range forecasts trend more threatening. The outlook stays bullish.