Rose on Grain – CME Corn and Wheat Off Slightly, Soybeans Higher on Week

Louis W. Rose IV

Corn:

CME July corn futures gave back 2½ cents last week to finish at 778¾.  Last weekend our proprietary models predicted a finish on the week that was to be near unchanged to lower Vs the previous Friday’s settlement, which proved to be correct.

The corn market finished near unchanged last week as strength in US currency and spec profit-taking were mostly offset by improved US export data, slow US sowing progress, and concerns regarding the South American crop.  The continuing war in Ukraine was also supportive.

Domestically, sowing and emergence across the US has been slow this season, but we hear that significant progress has been made across most locales over the last week.  Weekend rains across Cotton Country will slow soybean planting over the coming week, but a significant amount of late corn was sown in Tennessee over the last two weeks.

Net export sales were higher while shipments were lower Vs the previous sales period at approximately 17M and 54M bu, respectively.  Sales were ahead of the pace required to meet the USDA’s projection while shipments fell short of the pace requirement.  The US is 93% committed and 68% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season; shipments are near on par with their expected pace.

Internationally, concerns over the size of the South American crop and the war in Ukraine, both bullish factors, remain the market’s greatest concerns.

CFTC Commitments of Traders data for the week May 17 (futures only) showed that the trade modestly increased its net short position Vs the previous assay period to approximately 3.62B bu while large specs trimmed their net long to around 1.56B bu.  

For an in-depth analysis of CFTC data see our weekly COT analysis and commentary.

For this week, the weekly technical analysis for and money flow into the July contract remain bullish.  Weekly USDA export data, weather and crop reports, and geopolitical events are major factors for this week for corn, wheat, and beans.

Soybeans:

CME July soybeans gained 58¾ cents last week to finish at 1705¼.  Last weekend our proprietary models predicted a finish on the week that was to be near unchanged to higher Vs the previous Friday’s settlement, which proved to be correct.

CME soybeans finished higher, on improved US export data, slow domestic cowing progress, and tight 2022/23 balance sheet projections – especially the domestic balance sheet.

Domestically, as with corn, sowing across the US has been slow this season, but we hear that good progress has been made over the last week.  We continue to believe southern acreage will be significantly to notably higher Vs 2021.  The southern wheat harvest is fast approaching, which will be followed by second crop soybeans.  At this time, subsoil moisture across most of the southern US is adequate to good.

Net export sales and shipments were higher Vs the previous assay period at approximately 28M and 35M bu, respectively.  Sales and shipments were ahead of the pace required to meet the USDA’s projection.  The US is 102% committed and 84% shipped Vs the USDA’s revised target.  Sales are notably ahead the average expected pace for this point of the season; shipments are off slightly regarding expected pace.

Internationally, this season’s South American harvest, especially across Brazil, is effectively in the books.  Concerns about just how much smaller this season’s Brazilian crop is Vs 2021 remain.

CFTC Commitments of Traders data for the week ending May 17 (futures only) showed that the trade very slightly trimmed its aggregate net short position Vs the previous assay period to approximately 1.32B bu while large specs significantly increased their net long to around 710M bu.

For this week, the weekly technical analysis for and money flow into the July contract remain bullish.

CME Wheat:

CME SRW July futures lost 8¾ cents last week at 1168¾.  Last weekend our proprietary models predicted a finish on the week that was to be near unchanged to lower Vs the previous Friday’s settlement, which proved to be correct.

CME wheat finished modestly lower, post last week’s surge and the exceptionally poor condition of the US crop, on continued strength in US currency, weak US export data and the market’s overdone technical condition.

Domestically, the US wheat crop continues to be rated in abysmal condition, although it has improved marginally.  Harvest season across the US for winter wheat is just around the corner, but there may be little evidence of significant harvest pressure this year; in fact, new crop contracts will likely be bidding for acres against cotton and corn, among other crops.  For what its worth, the limited amount of winter wheat across the Mid-south and the southeastern states is in better condition Vs drought-stricken areas, which mostly grow HRW varieties.

Net export sales were lower while shipments were higher Vs the previous assay period at approximately 313K and 13M bu, respectively.  Both sales and shipments were off the average weekly pace required to meet the USDA’s official target.  The US is 89% committed and 80% shipped Vs the USDA’s revised target.  Sales are on par the average long-term pace for this point of the season while shipments are significantly off their expected pace.  SRW sales were near non-existent.

Internationally, the war in Ukraine continues to support the wheat market and, via association, corn, soybeans, and other Ags.  The world will need to bid for winter wheat acreage as the war continues to hinder production in Ukraine and exports from Russia.

CFTC Commitments of Traders data for the week ending May 17 (futures only) showed that the trade significantly increased its aggregate net short position to approximately 472M bu while large specs increased their aggregate net long to around 157M bu.

For this week, the weekly technical analysis for and money flow into the July contract remain bullish.  

Have a great weekend!

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This post was written by Louis Rose