Weekly Ag Markets Update – 07/03/2023

Wheat:  Wheat markets were mostly lower on Friday, but KC Wheat closed mixed.  All three markets were lower for the week, with most of the weakness seen in Chicago.  The USDA reports showed higher than expected planted area and lower than expected quarterly stocks, but there was nothing dramatic about the reports for Wheat.  Russia seems quiet although army officers and personnel are getting purged and the Russian Wheat exports keep flowing.  Canada increased its Wheat planted area on Tuesday so production ideas from that country are higher. Uncertain world weather and Russia’s political problems that exploded over the weekend were reasons to see the uncertain price action early this week.  The attempted coup ended as quickly as it began in Russia this weekend, but outside observers still say that the country is much less stable.  Russian Wheat exports are continuing as if nothing happened so far, but that could change down the road, too.  Rains are reported from the southern Great Plains to the Southeast, and the Midwest forecast features increasing chances for rain.  The weather is still in focus around the world.  Canada has been dry but is now getting some showers in parts of the Prairies.

Weekly Chicago Soft Red Winter Wheat Futures

Weekly Chicago Hard Red Winter Wheat Futures

Weekly Minneapolis Hard Red Spring Wheat Futures

 

Corn:  Corn was lower again Friday as Corn traders reacted to the USDA reports that showed a larger planted area than the trade had expected.  Oats were a little higher on Friday but a little lower for the week.  Corn planted area was over 94 million acres, from expectations of about 92 million.  The reaction to the news was extreme and September pushed down to recent lows on the weekly charts and contract lows on the daily charts.  The quarterly stocks report showed that about 5.1 billion bushels were in storage, down from trade guesses but it didn’t matter due to the plantings estimates reaction.  The market is at important support areas on the charts and it is possible that this support holds for the week.  The weather features additional precipitation for major growing areas this week.  Demand for US Corn in the world market has been very low and domestic demand has been week due to reduced Cattle and other livestock production.  Reports of dry initial development conditions were important.  Ideas are that the top end of the yield potential is lost but that no serious damage has been done yet, but serious damage could be done to crops where the rains miss in the next few weeks.  The Brazil Corn harvest is underway and so export prices for Corn from Brazil are getting relatively cheap and Brazil is getting the business.

Weekly Corn Futures

 Weekly Oats Futures

 

Soybeans and Soybean Meal:  Soybeans and\ the products ere all sharply higher with most of the gains coming from the USDA plantings estimates released on Friday morning.  USDA said that Soybeans planted area was just 81.5 million acres and the trade had expected something near 84.6 million acres.  The difference is very large and indicates that there could be little space for reduced yield estimates from bad weather moving forward.  The quarterly stocks were estimated 796 million bushels in storage as of June 1, but it was the plantings estimate that set the market off to sharply higher levels.  Trends turned up in all three markets last week mostly due to the plantings estimates although Soybean Oil also enjoys strong bio fuels demand.  The planted area report completely changed the Soybeans market.  Off and on precipitation is forecast for the next couple of weeks but it is possible that not all areas will get beneficial rain.  Ideas are that the top end of the yield potential is gone but severe damage has not been reported yet.  Damage could become severe soon if areas do not get any rain.  Reports indicate that bio fuels demand for Soybean Oil is very strong despite the moves in Washington to keep bio fuels demand at more moderate levels and is pushing domestic demand for Soybeans.  Brazil basis levels are still low and the US is being shut out of the market for most importers.  Brazil is still selling a lot of Soybeans to China and other countries.  Brazil has a very good crop, but the additional Soybeans grown in Brazil will be partially wiped out by the losses in Argentina.  Argentina has been forced to import from Brazil to keeps its crushing facilities operating.

Weekly Chicago Soybeans Futures

Weekly Chicago Soybean Meal Futures

 

Rice:  Rice closed mixed on Friday in reaction to the USDA planted area report.  The report showed that [planted area for All Rice was 2.687 million acres and that planted area for Long Grain was 1.992 million.  Futures were higher into the release of the data, but fell back to about unchanged in new crop months once the data was released.  Growing conditions are good for the new crop despite very hot conditions in southern growing areas and the overall new crop price strength has not been good so far.  The weather is still good for crop development.  Export demand has been uneven.  Mills are milling for the domestic market in Arkansas and are bidding for some Rice, but at least some mills say they now have enough bought to last until the harvest of the next crop.

Weekly Chicago Rice Futures

 

Palm Oil and Vegetable Oils:  Palm Oil was higher last week on ideas of reduced production and a weaker Ringgit.  The export reports from the private sources have not been strong for several weeks, but Amspec reported improved exports for the month on Friday.  Ideas are that demand is generally weak, with China struggling to open its economy and India looking to Sun oil for imports at the expense of other vegetable oils.  Canola was sharply higher on Friday along with the price action in Chicago.  Drier weather is forecast for the Prairies.  Trends are up on the daily charts in sympathy with the price action in Chicago.  Reports indicate that domestic demand has been strong due to favorable crush margins, but export demand is questioned, especially since the release of the weaker than expected Chinese economic data last week.  Scattered showers and rains have been reported so planting and initial growth conditions are good.

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures

 

Cotton:   Cotton closed lower last week despite reduced crop condition ratings as the trade concentrated on demand ideas.  The weekly export sales report showed reduced demand once again and certified stocks have shown a sharp increase in the last few weeks.  Ideas of weaker demand due to economic problems in Asia and improved production prospects here at home continue.  The weather has improved in Texas and most growing areas are in good condition, but it had been very hot.  There are still many concerns about demand from China and the rest of Asia.  Forecasts for showers are still showing in forecasts for West Texas to Oklahoma and Kansas and are expected to be beneficial.  Ideas are that the world economic problems were fading into the background as the US stock market has held strong and as the Chinese economy gets better after all of the Covid lockdowns.

Weekly US Cotton Futures

 

Frozen Concentrated Orange Juice and Citrus:  FCOJ closed higher last week in choppy trading and trends remain mixed on the charts.  July was the strongest month with short position holders getting out of the market before the deliveries start next week.  Futures remain supported by very short Oranges production estimates for Florida but seem to have factored in the production losses into the current prices.  Historically low estimates of production due in part to the hurricanes and in part to the greening disease that have hurt production, but conditions are significantly better now with scattered showers and moderate temperatures.  The weather remains generally good for production around the world for the next crop including production areas in Florida that have been impacted in a big way by the two storms seen previously in the state.  Brazil has some rain and conditions are rated good.  The latest Florida Movement and Pack report showed that inventories are now 40% less than last year.  Nielson said that the average price per gallon of Orange Juice was 88.30 cents through June 17, from 88.70 previously.  Demand was trimmed to 25.16 million gallons, from 25.91 million previously.  The Florida FCOJ Movement and Pack report showed that inventories remain more than 40% below last year.

Weekly FCOJ Futures

 

Coffee:  Both markets closed lower again Friday and was lower for the week.  London weekly charts show a key reversal down.  There are reports of dry weather for the harvest in Arabica production in Brazil with high production expectations and that production is now being harvested and starting to get exported.  The Arabica harvest has expanded and offers of Arabica from Brazil are increasing.  There are still tight Robusta supplies for the market amid strong demand for Robusta, but the Brazil harvest is in the market now and is expected to take much of the demand.  Producers in Vietnam and Indonesia are said to have almost nothing left to sell and producers in Colombia are also reported to be short Coffee to sell.  The market really needs big offers from Brazil to sustain any downside movement.  Southeast and south Asian producers could see another tough production year this year due to the effects of El Nino, but the weather appears to be good in these areas for now.

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

 

Sugar:   Both markets were higher on Friday but lower for the week on reports indicated that Brazil production increasing and as the weather in Southeast Asia is currently good for their next crop production prospects.  The Brazil production is apparently not enough to change the narrative of tight world supplies, but more Sugar is now available to the world market and prices are reacting.   India will restrict imports until the first half of next year.  The current year export quota is already gone and the government has no plans to allow for additional exports at this time.  The market is still hurt by good growing and harvesting conditions in Brazil but supported by tight current supplies.   The production is not there to meet the demand in many countries, with only Brazil among the major producers looking to have a good crop.  Indian production is less this year and Pakistan also has reduced production, but the monsoon has been good so far so both countries might have increased production next year.  In addition, India announced a higher base price for Sugar paid to farmers to help promote additional planted area Unica in Brazil said that the Sugar crush was 40.3 million tons for the first half of June.  Mills produced 2.55 million tons of Sugar, up 19% from last year, and 1.86 million tons of Ethanol, up 1.9% from last year.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

 

Cocoa:  Both markets closed higher last week and at new highs for the move on the daily and weekly charts as the rally has stalled but as ideas of tight supplies continue.  Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast continue, Talk is that hot and dry conditions reported earlier in Ivory Coast could curtail main crop production, and main crop production ideas are not strong.  Midcrop production ideas are strong due to rain mixed with some sun recently reported in Cocoa areas of the country.

Weekly New York Cocoa Futures

Weekly London Cocoa Futures

Questions? Ask Jack Scoville today at 312-264-4322