Highlights
The weather will move corn and beans prices higher. Corn probably will not make new contract highs, but that $7.50 area will be tested by July 6th (probably sooner) as it was last last Friday at $7.49¼.
Russia, Ukraine, and Turkey will meet in Istanbul next week to work on a grain trade solution. Market thinks this meeting will get Ukraine’s old and new crop wheat into the world marketplace. The market had priced that wheat out of the world S&D.
India’s food ministry may allow 500,000 mt of wheat to be exported to Egypt and Jordan. We suppose the “may allow” means they need to get Russia’s permission. Russia supplies India Russian crude at a 30% discount. India adds an equal amount of non-Russian crude and India is allowed (by the sanctions standards on Russian crude) to sell all of the mixed oil at world market price. India does not want to lose that money-making operation by selling wheat in competition with Russia’s wheat.
SovEcon (Andrey Sizov) raised its Russian wheat production estimate to a record large 89.2 million mt. The USDA is at 81.0 million. Last year’s “good” crop was about 75 million mt.
Yesterday, since the war is going to be multiple years long in the “world’s bread basket,” we stated we needed to rethink buying wheat puts or hanging on to the September puts already bought. The rethinking process is over.
Keep the wheat puts you have already bought and buy more on any 30 cent rebound in wheat futures. Now that we know oil and natural gas are the reason for the war, Russia has an opportunity to make a good-will gesture to get Ukraine’s wheat into the marketplace. Russia needs a good-will gesture.
Keep in mind, wheat can be grown on marginal quality soil. At $10 a bushel, even 10 bushel per acre wheat is profitable on very poor soil. The world has millions and millions of acres of very poor soil that normally do not get planted to anything.
The US national average gasoline price has declined for the first time in nine weeks, just under $5.
AgroConsult raised their Brazilian safrinha corn (second) crop estimate 1.7 million mt to 89.3 million mt.
For the week, spring wheat condition rating was up 5% in the good to excellent range, 6% above the market expectations of 53%. Every other crop condition declined, especially cotton. Given the weather forecast for cotton country, the cotton crop is in trouble. Take a look at the crop progress:
Export Inspections Tracker
Market Data
This morning:
Crude oil is at $105.45, down $4.07
The dollar index is at 104.74, up 0.30
July palm oil is at 5,063 MYR, down 147. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.
December cotton is at $111.35, down $2.50 per cw. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.
July natural gas is at $6.643, down 0.165. The contract high was made June, 8th at $9.664. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD is at $4.2782 per gallon, down 0.0802. The contract high was made June, 17th at $4.6444. ULSD stands for Ultra Low Sulfur Diesel.
Rain Days Update
The Western Corn Belt has 10 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 2 less rain daysthan yesterday.
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days