Weekly Ag Markets Update – 07/17/2023

Wheat:  Wheat markets were mixed on the weekly charts as July is about to expire, but the other months closed higher in response to  a Weaker US Dollar and world from President Putin of Russia that the grain deal for the Black Sea would most likely not be extended as it is not in the interests of Russia to do so anymore.  The deal expires today.  USDA production reports released on Wednesday showed much higher Winter Wheat production than the market expected.  Production was higher for HRW and SRW and a little higher than trade expectations for HRS.  White Winter production estimates were slightly below trade expectations.  Ending stocks estimates for the current year were slightly above trade estimates but were slightly below trade estimates for next year.  Weather forecasts call for warmer and drier weather for the northern Great Plains and Canadian Prairies.  Canada increased its Wheat planted area on Tuesday so production ideas from that country were higher but it is now suffering potential crop losses due to dry weather. Uncertain world weather and Russia’s political problems that exploded last week were reasons to see the stronger price action.  Russian Wheat exports are continuing as if nothing happened so far, but that could change down the road, too.  Ukrainian Wheat exports through the Black Sea are almost none.

Weekly Chicago Soft Red Winter Wheat Futures

Weekly Chicago Hard Red Winter Wheat Futures

Weekly Minneapolis Hard Red Spring Wheat Futures

 

Corn:  Corn was higher last week in response to improved weekly export sales and a sharply lower IUS Dollar.    The USDA reports showed less yield loss than market expectations and higher US production than expected on Wednesday.  USDA did cut yields and the trend is in the right direction, but the trade had expected a bigger yield adjustment.  The end result was higher rather than lower US production potential because of the increase in planted and harvested area as seen in the June 30 reports.  The weather features additional precipitation for major growing areas for the week after beneficial precipitation last week for some areas.  Other areas will be missed and stress will continue in these areas.  Demand for US Corn in the world market has been very low and domestic demand has been weak 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 were higher last week in response to a weaker US Dollar and in a bullish response to the negative USDA reports.  The USDA reports showed unchanged yield estimates for Soybeans production at 52 bu/acre and a sharp decrease in export demand on Wednesday, but traders doubt these estimates.  The result was higher than expected ending stocks and a sharp move lower for Soybeans futures.  The yield is a record and might not happen as the weather has been much less than perfect, but USDA did not see a reason to make a change at this time.  Lower yields could be forecast in future reports if the overall weather situation does not improve or improves only a little.  The cut to export demand was a surprise but could be true as China had had a slower economic recovery than expected and as Brazil still dominates the world market export situation.  Off and on precipitation is forecast for the next couple of weeks but it is possible that not all areas will get beneficial rain.  Big showers and storms were reported in Chicago and parts of the Midwest last week.  Ideas are that the top end of the yield potential is gone but severe damage has not been reported yet but is becoming possible in some areas.  In fact, yield ideas are probably increasing in some areas due to the recent and forecast weather but dropping in others.  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.

Weekly Chicago Soybeans Futures

Weekly Chicago Soybean Meal Futures

 

Rice:  Rice closed lower last week as July collapsed moving towards expiration of the contract.  New crop months were all higher in part on a weaker US Dollar and on follow through buying from the positive reaction to the release of the USDA reports that were released on Wednesday.   This has been an extremely volatile market lately and the high volatility is expected to continue.  USDA showed ample production and a slight increase in yields and slightly weaker demand.  Trends are still starting to turn down in the markets with the weakness this week.  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 in sympathy with the price action in Chicago and as traders wait for half month export data to be released by the private sources.  Ideas are that current 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 higher on dry Prairies growing conditions.  Drier weather is forecast for the Prairies.  Trends are up on the daily charts in sympathy with the price action in Chicago and the weather.

Weekly Malaysian Palm Oil Futures

Weekly Chicago Soybean Oil Futures

Weekly Canola Futures

 

Cotton:   Cotton closed little changed last week in response to the USDA reports that showed unchanged production and less demand.  A weaker US Dollar supported Cotton futures by helping with demand ideas of the trade.  Export demand was cut by 25 million bales and ending stocks were increased by 30 million bales as the carry in was also increased slightly.  Reports indicate that more showers that continue to improve crop conditions in Texas and into the Southeast this week.  Ideas of weaker demand due to economic problems in Asia and improved production prospects here at home continue.  The weather has improved, but it has been very hot.  There are still many concerns about demand from China and the rest of Asia due to the slow economic return of China in the world market and as China is trying not to buy from the US.  There are also worried developing that the US could be moving into a mild recession after many months of superlative growth.  Forecasts for showers are still showing in forecasts for West Texas to Oklahoma and Kansas and are expected to be beneficial.  Showers are also forecast for the Delta and Southeast.

Weekly US Cotton Futures

 

Frozen Concentrated Orange Juice and Citrus:  FCOJ closed lower last week with the roll in months, but the market is in a trading range on the daily charts at higher levels.  USDA showed small US and Florida production in its reports once again last week with only minimal changes to the production data.  Futures remain supported by very short Oranges production estimates for Florida but might 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.

Weekly FCOJ Futures

 

Coffee:  Both markets closed higher Friday and New York was a little higher for the week.  London closed lower but both markets are still in weekly trading ranges.  The Brazil harvest is moving quickly along, but the lower prices have forced Brazil producers to store Coffee instead of selling as they hope for higher prices later in the year.  Ideas are that roaster demand is improving with more Coffee and cheaper prices seen in the market now.  There are reports of dry weather for the harvest in Arabica production in Brazil with high production expectations.  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 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.  Monsoon rains have been uneven in India.  Vietnam exports are right at 1.0 million tons so far this year, down 3.15% from last year.  CECAFE said that Brazil exports were 2.6 million bags in June, down 17% from last year.  Arabica sales were  23% lower at 2.06 million bags and Robusta sales were 61% higher at just over 203,000 bags.

Weekly New York Arabica Coffee Futures

Weekly London Robusta Coffee Futures

 

 

Sugar:   New York and London closed higher last week, with London leading the way on ideas of short supplies for the world market and on a weaker US Dollar.  Brazil production increasing and as the weather in Southeast Asia is currently good for their next crop production prospects so relief could be coming soon.  More Sugar is now available to the world market and prices are reacting.  Indi still has problems with current and future production potential.   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.  Indian production is less this year and Pakistan also has reduced production and the monsoon has been uneven so far so both countries might have increased production next year or they might not.  India announced a higher base price for Sugar paid to farmers to help promote additional planted area.  Unica in Brazil said that mills crushed 43 million tons of Sugarcane in the second half of June, up 2.2% from last year.  Sugar production was 2.7 million tons, up 7.6% from last year and Ethanol production was 1.9 billion liters, down 5.6% from last year.  Marketing year to date crush is now 209.5 million tons, up 12% from last year, with Sugar production 212.2 million tons, up 26% from last year and Ethanol production at 9.6 billion liters, up 6.2% from last year.

Weekly New York World Raw Sugar Futures

Weekly London White Sugar Futures

 

Cocoa:  New York closed a little lower and London was much lower in correction last week as the squeeze in London apparently got resolved but as ideas of tight supplies continue. July still holds a big premium to the back months although there was some give back yesterday.  The markets are both developing trading ranges now so the lack of Cocoa in the market might be part of the price structure for now.  Ideas of tight supplies remain based on more reports of reduced arrivals in Ivory Coast and Ghana 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