Ag Market View for July 26.22

SOYBEANS

Soybeans traded sharply higher gaining strength once SU traded over the 20 day moving average near 13.87. Next resistance is near 14.10. Noon US Midwest weather maps had a new dry forecast wrinkle. GFS ensemble moved a high pressure ridge farther east into the heart of the Midwest Aug 2-9. Some feel that this map may be bringing the ridge too far east and could be exaggerating the strength of the ridge. The wrinkle is that the GFS  operational model for the first time shows a ridge in US SE moving west and merging with the ridge in the west similar to 1988. The drop in final US soybean yield could offset the slower than expected China buying if US soybeans. USDA dropped US soybean rating to 59 pct G/E vs 61 last week and 58 ly. One crop watcher dropped US yield .5 to 51.0. Best crops are in AR, IL, WI and IA. Lowest rated crop is IN, KY, MS and TN. Trade expects no soybean and soymeal August deliveries.

CORN

Corn futures closed higher. CU ended near 5.97. 20 day moving average is near 6.08. Late rally linked to noon US Midwest drier and warmer weather forecast. GFS ensemble moved a high pressure ridge farther east into the heart of the Midwest Aug 2-9. Some feel that this map may be bringing the ridge too far east and could be exaggerating the strength of the ridge. The wrinkle is that the GFS operational model for the first time shows a ridge in US SE moving west and merging with the ridge in the west similar to 1988. Matif corn futures continue to rally due to dry EU weather. USDA may have to drop EU crop 15 mmt in their Aug 12th report and raise their EU corn import number. They may also drop EU corn exports 5 mmt. They could offset the drop in EU supplies with higher Ukraine exports. Trade “deal” suggest Ukraine will export 5 mmt per month which could add 10-15 mmt of exports, but the problem is that the UN plan has to work, and Ukraine farmers have to harvest the 25 mmt crop that the USDA is projecting. Current Ukraine corn crop forecasts does not account for the potential physical inability to harvest due to a lack of fuel, parts, labor and storage. USDA also lowered US corn crop rating to 61 pct G/E vs 64 last week and 64 ly. Crop is about 1 week later than normal. Best crops are in IL, MI, WI, IA, ND and SD. Lowest rated crop is IN, KY and TN. One crop watcher dropped US yield 2 bpa to 175.0. Brazil corn export price is still a discount to US.

WHEAT

Wheat futures ended higher. WU is near 8.02. KWU is near 8.75. MWU is near 9.26. WU traded over Mondays high. 20 day moving average resistance is near 8.28. Futures are trying to add some premium due to concern that Ukraine may not ship 5 mmt of grain per month over next 3 months and Russia export may be below USDA estimate. USDA dropped US spring wheat crop rating 68 pct G/E vs 71 last week. Matif rallied due to  EU crop downgrades, EU export data some 36% ahead of last year and reports that France did Pakistan tender, a destination which would normally be Black Sea. Matif U/Z continue to make new highs. On a US$ fob basis French wheat remains cheap, and feed companies are adding to the tightness as the price of corn pushes them into wheat. One 27kt Ukraine corn vessel (not wheat) in Chornomorsk has reportedly been able to complete its load and could sail tomorrow but most of the vessels that are stuck have only limited crews, the charter parties and grain contracts they were due to fulfil have expired.

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