July 12 numbers not bullish

By Doug Tenney, Leist Mercantile

Following the noon report release, corn was down 28 cents, soybeans down 38 cents, and wheat  13 cents. Prior to the report, corn was down 23 cents, soybeans down 31 cents, and wheat down 12 cents. 

Broken record….again. The theme two weeks ago was inflation and recession concerns with consecutive days of dime plus losses for corn, soybeans, and wheat. The U.S. jobs report last week provided only a short term reprieve from the negative market tone. U.S. job growth was stronger than expected and moved the market talk away from inflation and recession.

Today those two items are once again dominating news headlines. Grains are all lower this morning gaining additional strength with losses getting bigger at the 9:30 am restart for the grains. 

The U.S. Midwest 2-week forecasts are warm and dry. Monday’s noon weather forecasts provided more rain than earlier expected. Those forecasts provided additional resistance for grain prices, moving them away from the highs of the day established during the night session. 

Today is just one more example of grain fundamentals and weather concerns tossed out the window. The market currently could care less, as “risk off,” is once again the theme for the day. “Risk off,” provides selling pressure which often intensifies all day.

The U.S. dollar is once again making fresh 20-year highs, exceeding the highs of last week. A strong U.S. dollar is not good for commodities, especially U.S. grain exports. Many around the world recognize copper as a leading indicator of world economic growth. Copper is making new 2-year lows which does little to erase concerns of inflation and recession. Reports of China locking down additional cities due to COVID proved negative for the grains on Monday.

U.S. 2022-2023 ending stocks: corn 1.470 billion bushels, last month 1.40 billion bushels; soybeans 230 million bushels, last month 280 million bushels; and wheat 639 million bushels, last month 627 million bushels. 

Trader estimates for 2022-2023 US ending stocks: corn, 1.442 billion bushels; soybeans, 211 million bushels; and wheat, 638 million bushels. 

U.S. 2021-2022 ending stocks: corn, 1510 billion bushels, last month 1.485 billion bushels. Soybeans, 215 million bushels, last month 205 million bushels.  

Trader estimates for 2021-2022 US ending stocks: corn 1.488 billion bushels; soybeans 208 million bushels.  

USDA today will also release corn, soybeans, and wheat production along with yield estimates. Prior to the August 12 WASDE Report USDA will be conducting field surveys to get a better handle on expected yields. 

USDA today projected China would be importing 90 million tons of world soybeans, last month   was 92 million tons. China was a buyer of US corn last week. In addition, they were buying wheat from the US, Canada, and Australia. 

Brazil soybean production was 126 million tons, last month 126 million tons. Brazil corn production was 116 million tons, last month 116 million tons. Argentina soybean production was   44 million tons, last month 43.4 million tons. Argentina corn production was 53million tons, last month 53 million tons.

US corn fields will soon be entering the critical pollination phase. Isolated Ohio corn fields will be pollinating this week. Weather concerns about pollination and potential higher prices due to a US ridge along with above normal temperatures and below normal rains, will run out of steam before the end of July. 

Look for the USDA numbers to be out of the picture within the first 30 minutes after the noon report is released. 

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