By MATT PIKE
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GENERAL COMMENTS:
September corn closed down 1 3/4 cents and December corn was down 3/4 cents. September soybeans closed down 6 cents and November soybeans were down 6 1/4 cents. September KC wheat closed up 7 cents, September Chicago wheat was up 1/4 cents, September MIAX Minneapolis wheat was down 1 1/2 cents.
The U.S. Dollar Index is down 0.59 at 98.19. The Dow Jones Industrial Average is up 130.0 points at 44,366.0. December gold is down $2.10 at $3,432.60, September silver is up $0.11 at $37.94 and September copper is up $0.0255. September crude oil is down $0.87 at $64.29, September ultra-low sulfur diesel is up $0.0075, September RBOB gasoline is down $0.0025 and September natural gas is up $0.073.
CORN:
September corn futures dropped another 1 3/4 cents on Wednesday, closing at $3.79 3/4. December futures were also down 3/4 cents to $4.01 1/4. December futures bears appeared to be making easy work of the $4.00 mark early Wednesday, before late-session bargain buyers stepped in to send prices back above the key level at least for now. For reference, the December 2024 board traded to a low price of $3.85 last August before reversing on late-season dryness, which ultimately trimmed the top end off U.S. yields as well. Seasonally speaking, August and September is a period where markets tend to look for a low.
Wednesday's EIA Petroleum Status report showed ethanol production in the U.S. averaged 1.081 million barrels per day last week, a decline of 15,000 barrels per day from the prior week's average. Last Friday, USDA reported the June monthly corn grind for ethanol in the U.S. totaled just under 448 million bushels (mb), lower than I had anticipated. Corn usage for ethanol through the marketing season has steadily lost its lead over 2023-24 after a very hot start last fall and is now just a 0.2% lead over last year, with USDA forecasting a 0.4% year-over-year increase. July and August are always wild cards for ethanol production, but at this rate, it seems unlikely that the U.S. will hit the USDA goal of 5.5 billion bushels in 2024-25. In positive news, ethanol margins remain steady with this week's USDA coproducts report showing that a bushel of corn produces $6.64 worth of products value in the Eastern Corn Belt. Ethanol exports are also strong, with June exports setting a monthly record at 173.7 million gallons. Ethanol exports to date are up 10%.
Traders will likely begin to look ahead to next week's WASDE report, where an increase in the corn yield estimate seems likely given the growing conditions thus far. That being said, I don't expect as bearish a forecast as compared to some of the private estimates being released in recent days, as USDA tends to slow play these developments, especially ahead of harvest. Perhaps this will serve as an opportunity for traders and algorithms to reset and offer some support to sinking prices. The aspect of next week's report that does keep me somewhat nervous is what USDA will find for old crop stocks, with the old crop price and spread action through summer certainly pointing to more corn relative to demand than has been estimated in this year's WASDE reports thus far.
The DTN National Corn Index finished Tuesday at $3.65. Wednesday's futures close and implied corn basis of 16 cents under the September board would indicate the Index on Wednesday afternoon to be near $3.63.
SOYBEANS:
September soybeans fell 6 cents on Wednesday to $9.65 1/2. November soybeans were down 6 1/4 cents to $9.84 1/2. An early attempt higher in the soybean market was again met with fierce selling, dropping prices closer to the bearish objective of the early April low in the mid $9.70s for the November board.
Early strength in the soybean market can likely be attributed to ongoing rumors that the U.S. and China are closing in on an agreement, although traders may be losing some faith in these assertions as the weeks keep coming and going with no confirmed soybean business with China for the new crop season. Soybean oil futures were also able to trade higher on Wednesday, primarily on wider energy market strength at mid-week. Late session selling can most likely be tied to early yield forecasts from private firms, all of which are coming in above USDA's official record 52.5 bpa forecast.
The next few weeks of weather will be important for the soybean crop. Temperatures are slated to be above average across the majority of key growing regions, while rainfall chances are certainly present but may be scattered in some regions. The good news is that soil moisture levels through the wet July should be adequate to allow crops to sustain through a period of dryness if it comes to that.
The DTN National Soybean Index finished Tuesday at $9.34. Wednesday's futures close and implied soybean basis of 57 cents under the November board would indicate the Index on Wednesday afternoon to be near $9.28.
WHEAT:
September Kansas City futures closed up 7 cents to $5.11 1/2 on Wednesday. Chicago futures were quiet, trading 1/4 cents higher on September futures. While MIAX Minneapolis spring wheat futures continued to struggle to find upward momentum, with the September contract down 1 1/2 cents in a quiet, narrow session. September KC futures were able to rebound from ugly price action on Tuesday, which set the lowest close for the most active hard red contract in just under five years. The short-term bullish target would be a pullback towards the 20-day moving average near $5.22 3/4.
In world wheat news, harvest is progressing in Russia with mixed results. The weekly International Grains Council (IGC) write-up noted improved yield prospects as harvest moves to the central regions, but also the potential for quality issues, namely low test weight. Private group SovEcon lowered its production forecast to 83.3 million metric tons (mmt), just a touch below the USDA July estimate of 83.5 mmt. Overall, traders in the marketplace are viewing a steady Russian crop, improved EU crop and good early prospects for both Argentine and Australian crops due later in 2025 as reasons for little concern regarding wheat availability. In good news, U.S. wheat offers remain competitive, with IGC noting hard red Gulf offers last week at $228 per ton, lower than most competing offers in their weekly rundown.
The DTN National HRW Index finished Tuesday at $4.52, while the DTN National HRS Index was at $5.27. Wednesday's futures close an implied basis of 53 cents under the September board for HRW, and 43 cents under the September board for HRS, would indicate the indices for Wednesday afternoon to be near $4.59 and $5.25, respectively.