7.11.24

 

 

Good afternoon. Grain markets were mostly higher on short covering Thursday, while the soy complex traded lower through mid morning before closing mixed. Traders and producers await the release of tomorrow's USDA monthly WASDE report, as Conab did little to alter pre-existing market perceptions this morning. Gaps still exist between the two organizations on Brazil's production figures for the 2023/24 season, but regardless of who you think is right, both totals combined with Argentina's production equate to production figures that are bigger than last year.

 

CU closed Thursday at 4.00 and 1/4, up 4 1/2 cents. CZ closed at 4.10 3/4, up 3 1/2 cents. SQ finished at 11.17, up 3 3/4. SX was up 3/4 of a cent at 10.67 3/4. New lows again for both old and new crop beans. WU closed at 5.71 1/4, up 9 3/4. High for the day was 5.80 3/4. Products were higher, August bean meal closed at 342.40, up $3.20/ton, and August bean oil closed at 47.12, up 78 points. Livestock markets were mostly higher; August live cattle closed at 182.25, unchanged, August feeders closed at 256.15, up $1.80, and August hogs closed at 86.67, up $2.00. Hogs did not close the gap from yesterday's open. Outside markets are mixed, crude oil futures are 30-60 cents/bbl higher, the Dow Jones index is up 20 points, and the US$ index is down 55 points. The NASDAQ is down 450 points, and the S&P500 is down 50 points. Both made new highs and are having outside days lower. The $ index traded to fresh five-week lows this morning.

 

Spreads ended the day mixed, corn spreads were down a penny to up a penny, and soybean spreads were down 2 1/4, to up a penny and a half. CN/CU closed at 6 1/2, down a penny, and SN/SU closed at 79, up a penny and 1/2. Tomorrow is the last trading day for July futures. CU/CZ traded to its narrowest level since January at -7.

 

Conab was first up on the data slate for the grain markets Thursday, with their monthly supply and demand update for July. The report expectedly did not offer many surprises, with production estimates for both corn and soybeans just marginally changed from last month. Soybean production was estimated at 147.337 mmt's, compared with last month's estimate of 147.354 mmt's. Planted area was also marginally changed; Conab estimated 46.020 mil ha's of planted area in July, vs 45.978 mil ha's last month. For corn, total production was estimated at 115.859 mmt's, compared with last month's 114.144 mmt's. Second crop corn production was seen at 90.007 mmt's, up from June's 88.116 mmt's. Planted area was estimated at 20.863 mil ha's, compared to last month's 20.838 mil ha's.

 

Next out this morning was weekly export sales data, which was just about as equally uninspiring. Old crop corn sales in the week ending July 4th came in at 538k mt's, compared with expectations for 300k-850k mt's. Featured buyers for the week were Colombia (200,600 mt's), Japan (188,300 mt's), and Mexico (177,600 mt's). Unknown rolled/canceled 142,300 mt's in the week. Old crop soybean sales were seen at 208k mt's, compared with expectations for 200k-600k mt's. Featured buyers for the week were the Netherlands (109,900 mt's), and Mexico (62,100 mt's). Unknown rolled/canceled 95,900 mt's in the week.

 

On the new crop side, wheat sales for the current marketing year were seen at 240k mt's, which was below the the lower end of trade guesses between 300k-700k mt's. This was a 5-week low sales total. Featured buyers for the week were Thailand (60,800 mt's), Japan (58,400 mt's), and Indonesia (53,800 mt's). New crop corn sales were seen at 117k mt's, and new crop soybean sales were seen at 191k mt's; both were within trade expectations.

 

Financial markets this morning saw both friendly jobs numbers and inflation data for June. The weekly jobless claims report showed claims in the week ending July 6th were down 17k from last week at 222k; economists had expected a reading of 236k, just marginally lower than last week's revised 239k reading. Continuing claims in the week prior were down 4k to 1.852 mil. Inflation data this morning showed consumer prices increased 0.1% in June, and annual inflation dropped to 3.0%. Traders had expected a 3.1% reading, as inflation inches closer to the Fed's desired 2% target. A cooling labor market and slowing economy, coupled with more dovish comments out of Fed Chair Powell the last two days, have traders and economists again expecting the rate-cutting cycle to begin in September.

 

Aside from regular daily weather, we also had the weekly drought monitor update out this morning. The update showed a bit of a mixed bag in conditions for the Southeast and Eastern half of the Midwest, while the central plains and areas in the western Corn Belt mostly saw improvement. Drought continues to worsen in the Carolina's and general Southeast, which is evidenced in weekly crop ratings. As a nation, 7% of the corn area is in D1-D4 drought conditions, up just 1% from last week. Soybeans also saw just a 1% increase on the week, with now 8% of the national area in D1-D4 drought. These numbers compare to 64% of the corn area and 57% of the soybean area in D1-D4 drought during the same week last year.

 

Mid-day weather is like the overnight runs; as the jet stream begins to move farther north, a drier outlook will emerge over the next 10 days which will be welcome in the plains and northwestern Corn Belt. Heat begins building into the East starting tomorrow, with a wide section of the plains and Western Midwest set to see highs in the 100's through the weekend. Next week however, models see a low pressure trough dropping out of Canada next Wednesday/Thursday that would again drop temps in the Corn Belt to below average, with highs seen in the upper 70's to low 80's. And amid recent boosts in moisture across almost all growing areas, a few days of heat will likely be viewed as a positive for many.

 

Globally, models continue to trend wetter in Northern Chinese growing areas, but are otherwise unchanged from previous days. Russian wheat areas and areas East of the Black Sea continue to see little to no moisture, while temps remain some 5-15 degrees F above average. Temps also will run well above average in western Europe, but adequate precip looks to offset this. Australia has a drier bias, but temps for most of the country are below average, limiting crop stress. And lastly, Argentina continues to see bitter cold temps over the next 5 days, before temps slightly moderate in the 10-day period. Brazil continues to be average to slightly above average on temps. Moisture continues to be limited mostly to areas in a band from Uruguay to Bolivia, with heavier amounts to the South and East.

 

Good luck with tomorrow's USDA July WASDE report!

 


Quotes are delayed, as of July 12, 2024, 09:14:06 AM CDT or prior.

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