Evening Report | July 31, 2023

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Soybean producers: Finish old-crop sales... Soybean futures have broken down technically, weather forecasts have improved and traders have not responded to the recent flurry of new-crop export sales, all suggesting the market could face more near-term price pressure. As a result, we advise soybean hedgers and cash-only marketers to sell the final 10% of 2022-crop to get to 100% sold.    

Corn producers: Trim old-crop gambling stocks... The corn market has weakened technically and appears headed to a test of the July lows. We advise corn hedgers and cash-only marketers to sell another 5% of 2022-crop to get to 90% priced in the cash market. We’ll hold the remaining 10% of old-crop as gambling stocks in case the market rebuilds some Black Sea premium into prices.

Corn condition drops more than expected... As of Sunday, USDA rated 55% of the corn crop as “good” to “excellent,” down two percentage points from the previous week. Traders expected a one-point decline. The portion of crop rated “poor” to “very poor” increased two points to 15%.

USDA reported 84% of the crop was silking (82% average) and 29% was in dough stage, equal to average for the date.

Soybean condition also drops more than anticipated... USDA rated 52% of the soybean crop as “good” to “excellent,” down two points from last week, whereas traders expected a one-point decline. The amount of crop rated “poor” to “very poor” increased one point to 15%.

USDA reported 83% of the soybean crop was blooming (78% average) and 50% was setting pods (47%).

Cotton condition takes a big step backwards... USDA rated 41% of the cotton crop as “good” to “excellent,” down five points from last week. The amount of crop rated “poor” to “very poor” jumped seven points to 31%. The Texas crop was rated 17% “good” to “excellent” and 50% in the bottom two categories.

USDA reported 86% of the crop was squaring (87% average) and 47% was setting bolls (50%).

Spring wheat condition drops sharply... USDA rated 42% of the U.S. spring wheat crop as “good” to “excellent,” down seven points from last week. Traders expected only a one-point decline. The “poor” to “very poor” rating held at 16%. North Dakota’s crop was rated 44% in the top two categories and 18% in the bottom two.

USDA reported 97% of the crop was headed, one point behind average. Harvest stood at 2%, three points behind normal for the date.

Winter wheat harvest passes three-quarters done... USDA reported winter wheat harvest reached 80% done as of Sunday, three points behind average. Harvest was completed in Texas and Oklahoma, while Kansas stood at 95% (99% average). Harvest continued to lag the normal rate in Colorado (81% vs. 95%) and Nebraska (72% vs. 86%).

Ukraine seeking ways to maintain grain shipments... The head of Ukraine’s intelligence said the Ukrainian army may provide a military escort that would allow ships to transit the Black Sea, despite Russia’s withdrawal from the Black Sea grain deal. Meanwhile, Ukraine and Croatia have agreed on the possibility of using Croatian ports on the Danube and the Adriatic Sea for the export of Ukrainian grain, Ukraine’s foreign minister Dmytro Kuleba said.

Morocco modifies wheat import subsidy rates... Morocco modified its wheat import subsidy scheme to offer the same rate for all supply origins, a step traders say could encourage some shipments from Russia. State grain agency ONICL said in a notice published on its website from Aug. 1 subsidies will be based on the cheapest out of German, Argentine, French and U.S. wheat prices. The document did not mention Russian and Ukrainian supplies, which previously had been attributed a lower subsidy rate compared with other origins. Traders told Reuters this meant wheat from the Black Sea countries would now receive the same subsidy as other origins.

End users fear India could impose basmati rice ban... Indian basmati rice exporters have been receiving early order requests amid concerns India could apply a ban on basmati rice exports, like what was done earlier this month with non-basmati white rice exports, according to Reuters. This fear has arisen due to a 3% increase in prices over a month and damage to the crop due to late monsoon rains. Under ordinary circumstances, buyers sign contracts for monthly shipments, however, due to the current situation, some are requesting that shipments, initially scheduled for September and October, be delivered in August instead. Though India has never stopped basmati rice exports in the past, it did impose export taxes on the product back in 2008.         

Meanwhile, India’s ban on non-basmati rice has led to shortages, price spikes and panic buying across North America.

WOTUS update... EPA has scheduled an additional meeting, making for a total of nine meetings at the Office of Management and Budget (OMB), to discuss its planned alterations to the “Waters of the U.S.” (WOTUS) rule. This rule, finalized earlier this year, has to be modified in response to a decision from the U.S. Supreme Court. The most recent meeting scheduled is with the Environmental Protection Network, an organization comprised of 550 former EPA staff and officials nationwide, is slated for Aug. 9.