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Editor’s note: Catch Randy Martinson every Friday after markets close on the
Agweek Market Wrap
at agweek.com.
The third week of June was a short week but it packed a big punch for the grains and started the ball rolling down the hill. By the time the week closed out there were small gains in wheat, modest losses in corn, and a mixed performance in soybeans with old crop July higher while new crop November was lower.
Profit taking and the need to clean up an overbought market condition started the grains on the defense, but weather forecasts calling for added chances of rain added to the pressure. The northern Plains and western Corn Belt received good rains over the weekend, but the rain did not move into Iowa and Illinois.
The Drought Monitor map continues to show the drought moving east across the U.S., and even a little north. The latest report now has 64% of the nation’s corn crop in some stage of drought, up 7% from last week while 57% of the nation’s soybean crop is in some stage of drought, up 6% from last week. Hard red spring wheat is now showing 15% of the crop in some stage of drought, which is up 11% from last week.
Technical selling and profit taking continued to pressure the grains at the start of the last week of June with additional selling tied to improving weather forecasts.
Losses were trimmed early in the week from an interesting dynamic that played out in Russia over the weekend. A coup was started on Saturday and appeared to have the strength to get to Moscow and make a serious challenge to take over Putin. But when the convoy was within 100 miles of Moscow, they turned around and returned to their base. Reports had the president of Belarus negotiating a compromise with the leader of the coup. There is more to this story.
The grains put in a wild session on Monday offering a little something for everyone. The grains opened Monday lower, slipped to post double digit losses on reports of good weekend rains but once the dust settled and the realization was that not every location received rain, the grains reversed direction and traded with solid double-digit gains.
Concerns on the timing of when the crop progress survey is done pulled the grains back to steady as if the survey was done Friday conditions would continue to be poor but if they did the survey on Sunday conditions would have improved. It was obvious that the survey was done Sunday after the rains, and it did not help some crops. Soybeans were the only grains to hold gains throughout the session Monday due to rumors of China buying.
Monday’s Crop Progress report was bullish once again, and that helped the grains open mixed, but the forecast for rain proved to be too much and it pulled the grains lower in the early morning hours. The grains did start the overnight session mixed officially with corn gapping higher pulling soybeans with it.
Monday afternoon’s Crop Progress continued to show a very poor rated corn and soybean crop as conditions are the second lowest for this week on record, only 1988 is lower. And that is not a good reference point to compare to.
Corn’s
crop rating dropped 5% last week (2% lower than expected) to 50% good/excellent. The states that dropped the most were Illinois down 10% to 26% good/excellent, Indiana down 9% to 47% good/excellent, Minnesota down 10% to 57% good/excellent, and Missouri down 12% to 31% good/excellent. Ohio and North Dakota saw the best improvements, with Ohio increasing 5% to 66% good/excellent while North Dakota improved 2% to 65% good/excellent.
Soybean’s
crop rating dropped 3% (as expected) to 51% good/excellent. The same states in corn were impacted in soybeans with Illinois dropping 8% to 25% good/excellent, Indiana down 10% to 47% good/excellent, Iowa down 8% to 48% good/excellent, Missouri down 12% to 32% good/excellent, and MN down 4% to 63% good/excellent. North Dakota and Ohio saw improvements with North Dakota’s crop improving 9% to 62% good/excellent while Ohio’s improved 5% to 66% good/excellent.
Winter wheat conditions continue their trend of improving 2% each week. Winter wheat improved 2% to 40% good/excellent, the highest rating of the year. That stands to reason as harvest activity continues to advance. Harvest was 24% complete (5% lower than expected) versus 33% average.
Spring wheat conditions did not drop much, only 1% to 50% good/excellent, but North Dakota’s spring wheat crop declined 6% to 49% good/excellent while SD’s crop dropped 5% to 27% good/excellent.
The grains had a rough day Tuesday with all of the grains selling off hard. All of the grains opened mixed (corn gapped higher due to friendly Crop Progress report) but then extended session losses into the rest of the night session. By the time Tuesday’s day session started all of the grains were posting 25 cent losses. A few weak longs and sell stops pushed the market to post 35 cent losses at one time, but the noon weather update reduced rain in the forecast. Odd that wheat, corn, and soybeans would perform the same off forecasts for rain for the central Corn Belt starting Thursday and extending into the weekend.
Dr. Michael Cordonnier lowered his U.S. yield estimates for corn 2 bushels to 175 bushels/acre and lowered soybeans 0.5 bushels to 50.5 bushels/acre. He made the comment that his yield estimate will likely decline more.
Dr. Cordonnier also updated his South America estimates. He left his corn production estimate unchanged which has Argentina at 35 million metric tons and Brazil at 130 million metric tons. Argentina’s soybean production was also left unchanged at 21 million metric tons. Yield reports so far have the soybean crop averaging 22.9 bushels/acre. Argentina’s corn harvest is also estimated at 44% complete versus 54% average. The yield is averaging 76.9 bushels/acre.
Stats
Canada’s acreage estimate
was bearish as all of the major grains saw higher planted acreage than expected. Stats Canada estimated all wheat acreage at 26.92 million versus expectations of 26.5 million and versus 22.2 million last year. Spring wheat acreage is estimated at 19.48 million versus expectations of 19.3 million and versus 18.04 million last year. The report estimated canola planted acres at 22.1 million (up 3.2% over last year) versus the average trade estimate of 21.8 million versus 21.4 million last year. Corn acreage increased 5.5% year over year and soybean acreage increased 6.8%.
The USDA will release the U.S. Planted Acreage estimates June 30 along with the Quarterly Grain Stocks. The estimates for the Planted Acreage estimate are corn 91.85 million versus 91.99 million in March and versus 88.58 million last year. Soybean acreage is estimated at 87.67 million versus 87.51 in March and versus 87.45 million last year. All wheat acreage is estimated at 49.66 million versus 49.86 million in March and versus 45.74 million last year. Winter wheat acreage is estimated at 37.31 million versus 37.51 million in March and versus 33.27 million last year. Other spring wheat acreage is estimated at 10.51 million versus 10.57 million in March and versus 10.835 million last year. Durum acreage is estimated at 1.77 million versus 1.78 million in March and versus 1.63 million last year.
The Quarterly Grain Stocks Report will also be released Friday. Early estimates are wheat stocks at 611 million bushels versus 698 million bushels last year, corn stocks at 4.255 billion bushels versus 4.349 billion bushels last year, and soybean stocks at 812 million bushels versus 968 million bushels last year.
“The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results.”
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