Highlights
The Weekly Basis will be sent to you Sunday mornings from now on.
July agriculture options expire today. Typically, that means weak futures prices, but it is reasonable to think these markets have seen enough weakness since last Friday. The 8 to 14 day weather forecast has above normal temperatures for all crops except those close to the Great Lakes with above normal rainfall for every field west of the Indiana/Illinois line. It is safe to say that rain is priced into current prices. There are enough very dry areas that, if all that area does not get the expected rainfall, corn and bean prices will scream to new highs that first week of July. At least half of the market opinions are that the fear of recession is hurting commodity prices more than the rainy forecast. Rain the first week of July does not make a crop.
Given the Acreage and Grain Stocks report are on Thursday, we will see short covering before then. It is also reasonable to think futures prices will be smartly higher today since it is the end of the week and traders like to even-up at the end of a week. However, Roger said yesterday he guaranteed a rally by the close today. Nothing is 100% in this business and Roger knows better than to say something that stupid.
Andrey Sizov (SovEcon) reports Russia’s southern region is harvesting a tremendous barley with a yield of 7.4 mt/ha (136 bushels per acre), which is 19% more than last year’s decent crop. The barley comes off before the wheat and it is a reliable indicator of wheat yields. Winter wheat harvest is in July and 70% of Russia’s wheat is winter wheat. Sizov last week predicted a record large 89 million mt Russian wheat crop.
Suddenly, all of Europe has great crops of everything, including corn and canola. Eight days ago, the only news out of Europe was how the heat was ruining all the crops and all other forms of life.
Companies and countries should ask the United States for help if they have any problems importing Russian food and fertilizer, a senior U.S. official said, stressing that such goods were not subject to U.S. sanctions. He said there has been “over compliance with sanctions."
The US Energy Secretary is considering lifting the “summer fuel specifications.” We do not know what that means. It was just a few weeks ago the EPA approved E15 for summer use. The rumor is a temporary waiver of the biofuel mandate that could be agreed on at the G7 summit this weekend.
Natural gas futures are down 34.8% since June 8th high. The closure of the Liquefied Natural Gas (LNG) ship loading facility at Freeport has all but stopped LNG exports. The US had been shipping 140 to 150 ship loads a month to Europe to reduce their dependence on Russian natural gas. Will cheaper NG mean cheaper propane?
This afternoon, the USDA will issue its monthly Cattle on Feed Report, Expectations are:
On Feed 101.6% of a year ago
Placements 100%
Marketings 103.2%.
Market Data
This morning:
Crude oil is at $104.75, up $0.50
The dollar index is at 104.27, down 0.16
July palm oil is at 4,708 MYR, down 162. 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 $98.29, down $3.72 per cw. 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 $6.237, down 0.002. The contract high was made June, 8th at $9.664. Natural gas is the primary cost to manufacture nitrogen fertilizer.
July ULSD is at $4.3380 per gallon, up 0.0001. The contract high was made June, 17th at $4.6444. ULSD stands for Ultra Low Sulfur Diesel.
Rain Days Update
The Western Corn Belt has 2 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 1 more 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