Highlights, China's Wheat, USDA S&D, Markets & Rain Days Update 6/13/22
- Wright Team
- Jun 12, 2022
- 3 min read
Highlights
Jon Scheve is a grain market consultant whose weekly comments are posted on our website and, when they are posted, you should be receiving a notice of his post, just like The Tech Guy. Sunday, we talked about how the corn basis indicates corn futures are too cheap. Jon’s post later Sunday included:
Last week I mentioned the basis market was indicating a potential futures rally. This week the July corn board did increase, and it also rose faster than September futures. This results in a spread increase, which when combined with the huge basis rally the previous week, likely indicates old crop corn futures are still undervalued.
Poet at Fairbank, NE Iowa corn basis last week was 10 under the July; now 35 over July is posted, but they are paying +40 if you ask.
China produces more wheat than any other country in the world and they eat all of it and import wheat. All spring we were told China’s winter wheat crop was the worst ever wheat crop.
The Foreign Agricultural Service of the USDA reports China’s wheat harvest is 50% complete and projections are the wheat crop will make 133 (USDA at 135) million mts this year, down only slightly from 136.95 million mts a year ago and 134.25 two years ago. The country is expected to import an additional 9 (USDA at 9.5) million mts this marketing year. Be advised China’s wheat carryover is more wheat than it produces every year.
China’s wheat carryover:
This year is 141.92 million mts; USDA production 135 million mt; imports 9.5 million mt
Last year: 144.12 carryover and 136.95 production; imports 9.70
Two years ago: 150 carryover and 134.25 production; imports 10.62
The market chatter would have you believe the world will run out of wheat this year: China won’t run out for at least two more years and only then if they have a 100% crop failure next year.
Late yesterday afternoon, a grain bin with a half million bushels of what looks like barley collapsed in Iran. Barley is a feed grain as is sorghum, corn, rye, and oats, but it looks like they will be able to salvage most of the grain.
June USDA S&D Update
Attached is our version of Friday’s USDA Supply & Demand for wheat, corn, and beans for three marketing years. The most important numbers on the sheet is the number of days’ use of the carryover trends for each of the three commodities for USA and world.
Market Data
This morning:
Crude oil is at $118.46, down $2.21
The dollar index is at 104.51, up 0.36
July palm oil is at 5,975 MYR, down 168. The contract high was made April, 29th at 7,229 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.
December cotton is at $120.51, down $1.85 per cwt. The contract high was made May, 17th at $133.79 per cwt. Cotton competes with soybeans and corn for acres.
July natural gas is at $8.607, down 0.243. The contract high was made June, 8th at $9.664. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD is at $4.2904 per gallon, down 0.0763. The contract high was made June, 10th at $4.5135. ULSD stands for Ultra Low Sulfur Diesel.
Rain Days Update
The Western Corn Belt has 5 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 less rain daysthan yesterday.
The 6 to 10 day forecast updated every day at: https://www.cpc.ncep.noaa.gov/products/predictions/610day/
Explanation of Rain Days
Want to read more?
Subscribe to wrightonthemarket.com to keep reading this exclusive post.