Grains are quietly lower to close:
Sept Corn -6 cents/bu (5.36 3/4)
Dec Corn -7 1/4 cents/bu (5.36 3/4)
Nov Soybeans -7 ¾ cents/bu (13.19 1/2)
Sept Chi Wheat -4 1/4 cents/bu (6.18)
Cdn $ -0.00360 (79.790 cents)
WTI Crude Oil +0.74/barrel (72.94)
Grains fell lower today as strong chances of rain held their position in the forecast for much of the U.S. including the Northwest. The weather debate regarding whether rains forecasted will be enough to help with dryness will continue into tomorrow. Overall, the crop conditions and progress reports (released every Monday) remain the primary report responsible for the “success” of rains.
This morning, the USDA confirmed a sale of 122,200 tonnes of soybean meal to Mexico in 2021/22. Rumours are swirling that China may have bought some U.S. soybeans for fall shipment, but we will have to watch the flashes tomorrow for confirmation.
The EIA Report was released this morning for the week ending July 2nd. Commercial crude oil stocks decreased 6.9 million barrels to 445.5 million barrels, and ethanol decreased 400,000 barrels to 21.1 million barrels (first decline in 6 weeks). Ethanol production did however increase 8 thousand barrels per day to 1,067 thousand barrels per day. This production tied the post-COVID high! U.S. gasoline demand (as measured by total finished motor gasoline supplied to the market) hit 10.043 million bpd last week, an all-time weekly record in data back to 1991. Ethanol production utilized 105.6 million bushels of corn in the week ending July 2, up from 104.7 million the previous week and up from 91.2 the previous year. Estimated marketing year to date corn use for ethanol totals 4.204 billion bushels, up 140 million or 3.4% from the previous year's pace. The total falls short of the seasonal pace needed to hit USDA's target by 40 million bushels, down from 48 million the previous week.
The drought monitor for this week is showing some improvement from the last few weeks, but dryness in the Upper Midwest/Northern Plains continues to persist. The forecasts are showing some precipitation across the U.S. which is expected to be extremely beneficial to Iowa, but may not be as heavy as North Dakota and Minnesota would prefer.
The Canadian Dollar is under some pressure today as the U.S. talks about potentially raising their interest rates sooner than expected to combat inflation.
Next Monday, July 12th, the USDA will release it’s July Supply and Demand/Crop Report. The consensus of the trade is that the government is unlikely to make any major changes to 2021 production levels or to ending stock projections (both old crop or new crop). Most analysts believe that the USDA will wait for the August Crop Report to “tweak” yield projections, particularly in light of recent rains in the dry areas of the NW Corn Belt, and the fact that it is difficult to assess the overall benefits of those rains so soon after they have fallen. There is however speculation that the USDA may cut South American production on corn due to drought. Brazil cut its official corn crop estimate by 3 MMT from last month to 93.4 MMT. But that’s still well above most private crop estimates. Crop Consultant Dr. Michael Cordonnier is at 88 MMT. Brazil-based AgRural estimates the crop at just 85.3 MMT. Conab reduced Brazil's corn crop by 3 mmt based on a smaller second crop, but they kept exports the same as last month, lowering ending stocks instead. Some analysts see USDA on Monday reducing the crop to 92.2 mmt from the June estimate of 98.5 mmt. Below is a listing of the average trade guesses for Monday’s Report:
Yesterday, Brazil’s Ag Ministry projected a 27% rise in domestic grain production over the next 10 years. They project that acreage will increase from 68.7 million hectares to a whopping 81.0 million hectares in 2030/31 (170 million acres currently increasing to 200 million acres in 2030)
The export sales report will be released tomorrow for the week ended July 1st. Estimates for that report are below in thousand tonnes.
Funds were thought to have been all sellers today.