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Limit Up

By Tori Uhland

June 18, 2024

Last week, the USDA released their June 2024 World Agricultural Supply and Demand Estimates (WASDE) report. After feeling bearish to start, the trade quickly discounted it as the report was rather uneventful and overall gave a neutral tone to the market. The focus has turned back to weather and what is happening in South America. This is not atypical for the June report as the USDA generally doesn’t publish major supply changes for corn and beans during their June report.

The USDA made only one change to the oil crop soybean balance sheet and lowered crush by 10 million bushels, resulting in an increase of beginning stocks for new crop beans, but otherwise left the soybean balance sheet alone. Following the flooding in Southern Brazil, the trade expected some bigger cuts to the South American crop, but only about 5 percent of Brazil’s soybean crop was impacted by the floods. Around 66 percent of the crop in Rio Grande do Sul had been harvested when the flooding began, and they only contribute 14 percent of Brazil’s total soybean production. Because of this, the USDA didn’t take more than 1 Million Metric Ton (MMT) or 37 million bushels off of Brazil’s harvest estimate.

In the wheat market, weather in the Black Sea region and harvest in the United States is the main focus. The USDA did increase exports on the balance sheet, but otherwise left it unchanged. Over the last several years. US wheat has struggled to compete in the world market with cheaper supplies coming out of Russia, but due to the weather problems, we may see more export business come our way. Forecasts in the Southern Plains are warm and dry, which should support a quick harvest. So far, yield reports in Kansas have come in better than expected. The upward revision of export paces is supportive to wheat prices in the US.

The USDA made no changes to the US corn balance sheets. The trade is keeping an eye on the weather, as hot temperatures in early July could stress the crops where moisture surpluses aren’t as high. July corn has resistance around $4.62, but if the futures can break through that a run to the May high of $4.75 is possible. Argentina’s corn crop was 30 percent harvested at the beginning of June and Brazil is approaching 25 percent of the way through their safrinha harvest. The USDA may be more likely to change South American crop forecasts in their July report when more of the crops have been harvested.

Weather around the world continues to be a hot button item for the trade. According to their agriculture ministry, China is facing hot temperatures and drought in parts of the country that is adversely impacting planting. Forecasts had been calling for record highs last week. Countries across Asia have been bracing themselves for a severe summer. In some of China’s wheat growing provinces, temperatures were expected to reach over 111.2 degrees Fahrenheit, which would break records for the month of June. The high temperatures have accelerated soil moisture loss and there is concern of how it will impact crops.

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