Grain Prices “Shrugging Off” Lower Crop Conditions

Dow Jones writer Kirk Maltais reported yesterday that, “Wheat for September delivery fell 5.4% to $6.99 a bushel, on the Chicago Board of Trade on Tuesday, with grain traders looking past the USDA’s Crop Progress report and instead focusing on Friday’s acreage and stock reports.”

Maltais noted that, “Shrugging Off Conditions: Grain traders didn’t take their cue from lower crop conditions reported by the USDA, but instead looked to wetter forecasts in growing areas as a sign that dryness-related stress may soon abate.”

The Dow Jones article added that, “The emphasis being placed on rainfall by grain traders is expected to extend into the first two weeks of July, said Daniel Flynn of Price Futures Group in a note. ‘The real question is if the crops can endure more dryness with slim to nil soil moisture as corn moves ever so closely to the pollination stage,’ he said. ‘The next two weeks will be critical for rainfall to provide soil moisture.’ If this doesn’t happen, then crop production is expected to sink.”

In its Daily U.S. Agricultural Weather Highlights report yesterday, the USDA’s Office of the Chief Economist indicated that, “On June 25, topsoil moisture was rated more than one-third very short to short in all Midwestern States except North Dakota and Ohio, led by Illinois (89%), Missouri (88%), and Michigan (85%).”

Reuters writers Gus Trompiz and Naveen Thukral reported yesterday that, “Chicago corn, wheat and soybeans lost around 3% on Tuesday as improved rain prospects in the U.S. Midwest tempered concerns over dry weather that has stressed crops this month.”

The article noted that, “Expanding drought in the Midwest has raised doubts about U.S. government projections of record corn and soybean harvests this year, though participants still see time for crops to recover if July is relatively wet.”

And today, Reuters News reported that, “Chicago corn lost more ground on Wednesday, while soybeans slid for a second session as forecasts of rains in some of the parched growing regions in the United States weighed on prices.”

Meanwhile, Brian K Sullivan reported yesterday at Bloomberg that, “The heat that has set records across Texas and Mexico will be spreading across the central and southern US in coming days, pushing extremes as far north as Illinois.

“With hot air trapped under a giant blob of high pressure that has been stuck in the atmosphere for about two weeks, the phenomenon is what’s often called a heat dome. Some meteorologists have called these ‘domes of doom’ for their impact on energy and agriculture markets.”

Elsewhere, Reuters writer Pavel Polityuk reported yesterday that, “Ukraine’s grain harvest is likely to fall to 42.5 million tonnes in 2023 from around 53 million tonnes in 2022 due to a smaller sowing area, the Ukrainian Agribusiness Club (UCAB) business association said on Tuesday.

“The harvest could include 16.3 million tonnes of wheat, 21.1 million tonnes of corn and 4.2 million tonnes of barley, the association said in a statement.”

And in a separate Reuters article yesterday, Polityuk reported that,

Ukraine must be ready to export grain almost exclusively via its Danube River ports because Russia is effectively blocking Black Sea shipments, the Ukrainian Sea Ports Authority said on Tuesday.

“‘With Russia effectively blocking the operation of the grain corridor, we need to be ready to receive almost the entire export volume of the new harvest through the Danube ports,’ Dmytro Barinov, the Ukrainian Sea Ports Authority’s deputy head, said on Facebook.”

Also yesterday, Financial Times writer Roman Olearchyk reported that, “Ukraine has hit back at doubters over the progress of its summer counteroffensive, insisting recent modest gains against Russian occupiers were merely a ‘preview’ of a much bigger push to come.

“Oleksiy Reznikov, Ukraine’s defence minister, told the Financial Times that the liberation of a group of villages under Russian occupation in recent weeks was ‘not the main event‘ in Kyiv’s planned attack.

“‘When it happens, you will all see it . . . Everyone will see everything,’ said Reznikov, brushing aside media coverage of slow progress against well-fortified Russian positions.”