- HEADLINES: Soybeans fall on technical selling: Corn futures close mixed: Wheat ends mixed with KC & MGE futures higher and SRW nearly unchanged. Equatorial ocean temperatures reach El Niño threshold; strong event due in late summer/autumn.
- Record ocean temperatures, including a rather strong El Niño event, will be a major driver the global climate in 2023. Rapid warming will be ongoing, and unique to this year will be just how strong this El Niño is likely to be. The CFS projects Pacific Ocean temperatures to peak in Sep-Nov at a level seen only twice in history.
- Long range weather will become less predictable, but in places like Southeast Asia and Australia there is a growing likelihood of severe drought development. Note that weather in these regions, along with Argentina, correlate most strongly with El Niño/La Niña. Already it does appear that warming Pacific temperature is promoting noticeable dryness in Malaysia & Indonesia and Australia’s major grain producing regions.
- Soybean futures finished lower on Thursday. Soybean meal initially fell to new lows, and selling in soybeans accelerated as old and new crop futures broke through weekly lows. July recovered late in the day to end just below unchanged.
- Soybean export sales last week rose to a 3-week high of 4 million bu, and sales totalled 10.6 million bu. However, outstanding sales are at a 9-year low of just 108 million bu. Old crop exports are expected to remain slow, while world demand for US soybeans should switch to new crop in the coming weeks.
- While US soybean meal prices tick lower, the export program is steadily building. Sales last week rose to an 8-week high and were the fourth largest of the year at 379,188 short tons. Weekly exports eased to 249,074 short tons, but cumulative exports are now above last year, at an 8-year high, and the second largest on record. Outstanding sales are also gaining on last year and are the fourth largest on record. We expect that this building trend will continue as world demand is directed to the US.
- Quiet and choppy trade is expected ahead of the long weekend, with Monday weather forecasts and debt ceiling news to direct early trends next week.
- Chicago July corn rose 4 cents, but the deferred contracts lost 2 to 5 cents. Strong old-crop cash prices supported the July contract. Dismal new-crop export sales and a stronger US$ contributed to weaker new-crop futures. Corn sales saw net cancellations of 2.96 million bu of old-crop and new-crop sales of just 2.1 million bu. While central US weather is problematic, weather could improve for the Brazilian second crop, but there is an accompanying risk of freeze/frosts in the south. Elsewhere in the world, Ukraine reports that 97% of its spring crops have been sown. To date, corn seedings total 3.7 million ha (9.14 million acres). That compares to 4.41 million a year, and 5.14 million two years ago. Conversely, sunflowers seedings were 4.62 million ha (up 8%). Soybean seedings were 1.6 million ha vs 1.15 a year ago. The lack of finance and reduced profitability impact yields which are expected to fall below last year’s. The country’s corn crop is pegged to be 22 million mt, down 5 million year on year and the smallest in 11 years. Exports (assuming the grain corridor remains open) are expected to be 16.5 million mt, down 9 million from this year.
- KC wheat futures were down 1 cent to 8 cents higher at the close. Similarly, MGE futures rose 7-8 cents. The Chicago SRW contracts were nearly unchanged to up 2 cents at the close. Rain in the Plains and expectations that old-crop Russian and EU stocks will end up larger than expected, kept the market subdued. US export sales for the week ending May 18 saw net cancellations of 1.66 million bu of old-crop wheat, while new-crop sales totaled 9 million bu. Wheat imports by the Maghrib (Morocco, Algeria, Tunisia, and Libya) are projected to be record large. The region’s combined crop is projected to be just 7 million mt, the smallest in 15 years. Domestic consumption is projected to be 27 million mt. However, some of these countries have serious balance of payments problems and may not be able to pay for all the imports that are required. Elsewhere, Egypt, the world’s largest importer, has deferred payments for its purchases (mostly from Russia). Here again the problem is a lack of foreign currency.