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By Tori Uhland

June 14, 2023

The USDA released the June WASDE (World Agricultural Supply & Demand Estimates) report on Friday, and while it wasn’t bullish news, there are a few things that are overshadowing that to start the week.

Corn initially dropped along with soybeans after Friday’s report but recovered sharply with the December contract gapping higher during the Sunday night trade. Weather has improved in some areas of the corn belt; however, there is doubt that it is enough to stop the deterioration in crop conditions. Last week, condition ratings dropped by 5% from the previous week. The weather premium is in the market, but the forecast is calling for some rain events and there is still time for crop conditions to improve. Also keep in mind that the gap left in the charts will probably get filled. Export demand still isn’t great, and despite reductions to the USDA estimate, there is still a risk that exports will be below the latest number.

The soybean market has been all over the place between a bearish USDA report and poor crop conditions. Despite moisture and cooler weather, the trade thinks the crop is off to a poor start and that the good weather and rains will do more to maintain the current crop conditions rather than aid in any improvement. Last week’s Good/Excellent rating came in at 62 percent compared to a ten year average of 73 percent, with the Poor/Very Poor category at 7 percent versus a 4 percent average. Demand for soybeans in may did improve slightly, but there is a lot of doubt that demand will see much improvement anytime soon. Soybean exports were at a marketing year low last week. There is also a risk that the USDA projection for beans is still too high.

The wheat market traded similarly to corn following the USDA report. The WASDE numbers were bearish but not dramatic. The cool and wet weather has improved crop prospects but not by huge numbers. The wheat market is also trading on weather as well as spillover action from the corn and soybean markets.

Cattle markets were lower on Friday for the third day in a row after coming off all-time highs earlier in the week. Cash markets are still firm, and cattle supplies are still tight. The boxed beef cutout is the highest it has been since September 2021. Hogs put on a contract low on May 26 but have since rallied 22% to correct an oversold market.

In the geopolitical news, Ukraine said its troops have recaptured three villages from Russian forces in its counteroffensive. Reuters is also reporting that Russia is still not satisfied with how the Black Sea export deal is being implemented and has threatened to walk away from the deal on July 17 if demands to improve their own food and fertilizer exports are not met.

With the June WASDE report out of the way, most eyes are on the weather this week as forecasts are impacting prospects for corn, beans and wheat.

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