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By Tori Uhland

June 28, 2023

The rollercoaster continues. Last week, July corn opened at 6.4075, made a high of 6.725 and a low of 6.29 before settling at 6.3075 for the week. September and December were similar, both trading in ranges of over 40 cents. The main concern has been weather in the Midwest. The corn belt did receive some moisture over the weekend as expected. Showers were mainly focused across the northwest and eastern Ohio valley. Stressed areas in the Midwest are narrowing with the recent rains, but overall things are still drier than historical levels. Forecasts for the month ahead show a slightly drier shift in the Northern Midwest. Odds for sustained heat and dryness in the Midwest are still low. El Nino is likely to strengthen through July.

On Monday afternoon, corn crop conditions came in at 50 percent good/excellent versus 52 percent expected, 55 percent last week and 67 percent last year. Once again, there were notable declines in Illinois, Indiana, Missouri, Minnesota, and Wisconsin. Soybean conditions came in as expected at 51 percent good/excellent versus 54 percent last week and 65 percent last year. There were notable declines in Illinois, Indiana, Missouri, Iowa and Wisconsin. The declines in conditions weren’t unexpected despite the rains over the weekend. However, it also depends when the crops were evaluated for the estimates and whether it was before the moisture events or not. Extreme drought subsoil moisture conditions still remain in parts of large crop production areas. However, there are areas in some states that are still likely to produce record yields, which could offset production deficits in dry areas of those states. Many experts are still thinking that there is still potential for a 175-177 bushel per acre crop nationally if we get some normal weather over the next few weeks.

Kansas City wheat has made some gains for a few different reasons. Just like it has been for nearly a year and a half, concerns over Russia are influencing the market and traders believe the situation is still worthy of risk premium in the wheat market. The word is now that the Black Sea Grain Corridor agreement will likely be ending soon, so that has given prices a boost. There are some concerns over spring wheat production potential in both the U.S. and Russia due to dry weather, as well as across Europe. Wheat harvest is also approaching in China, and there was also news that somewhere between 735 million to 1.1 billion bushels of wheat was damaged by heavy rains in their major wheat producing region. That is a big chunk to downgrade, and there will most likely be quality issues with the crop, but the world overall still has plenty of wheat. Supply concerns will probably be class related (i.e. concerns with spring wheat, not wheat overall).

Crop conditions and progress came out on Monday afternoon. Spring wheat conditions were 50 percent good/excellent versus 51 percent expected. Winter wheat conditions were 40 percent good/excellent versus 38 percent expected, 38 percent last week and 30 percent last year. Rains in the southern plains have certainly helped the wheat crop.

August cattle traded both lower and higher last week waiting on the Cattle on Feed report numbers. Placements came in at 5 percent, higher than the expected 1.7 percent. Placements suggest that supplies for the second half of the year won’t be as tight as expected, but feedlot numbers continue to decline relative to last year.

July futures expire this week, so bids will be rolling to the September contract if they haven’t already. The USDA will be releasing their Quarterly Stocks report as well as the Annual Acreage report on Friday, June 30th. Friday also marks the end of the month and quarter, so there could be some added volatility. However, the trade isn’t expecting many surprises in the report. We are pretty much in a strictly weather-driven market now, and there isn’t much time left to fix it.

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