Corn Futures Rise as Conditions Degrade

By Kirk Maltais

--Corn for July delivery rose 1.7%, to $6.06 3/4 a bushel, on the Chicago Board of Trade on Tuesday, in reaction to the USDA reporting lower crop ratings for U.S. corn in its crop progress report yesterday.

--Wheat for July delivery rose 0.5% to $6.27 3/4 a bushel.

--Soybeans for July delivery rose 0.2% to $13.52 1/2 a bushel.

HIGHLIGHTS

Too Hot to Handle: The apparent toll taken on nascent U.S. crops by hot weather was evident in the USDA's latest Crop Progress report released yesterday - which showed a bigger-than-expected drop in crop quality. Sixty-four percent of U.S. corn is in good or excellent condition, which is down 5 points from last week - and 9 points below conditions at this time last year. The decline was larger than expected by analysts. "There is still a lot of time in the growing season but traders will be on high alert for changes in the forecast for the Midwest and Western Prairies," said Craig Turner of StoneX in a note.

Reversing Course: Wheat continued a reversal of the selling seen in May, making it the fifth straight winning session and taking wheat off its lowest level since December 2020. "They have recently been lent tailwind by the supply side in particular," said Commerzbank in a note. An explosion at a Ukraine dam today was likely to have destroyed stored grain, which may also pressure prices.

INSIGHT

Setting a New Record: Exports of wheat out of Russia are expected to exceed last year's record, said SovEcon in a note. The agricultural research firm says that exports in the 2023/24 marketing year are expected to beat the previous year by 3%, totaling 45.7 million metric tons. The firm says that higher production of wheat, totaling 88 million tons, is the primary driver for higher exports. "The projection was revised upwards due to higher crop estimates, a low likelihood of new Russian government intervention purchases, and the launch of operations at a new deep-water terminal," said Andrey Sizov of SovEcon in the note - which in turn is expected to pressure world prices.

Growing Dour: Farmers are souring on grain markets, thanks to falling prices for U.S. row crops. In a survey from the University of Purdue and the CME Group, lower prices are coming as input costs rise, weakening the bottom line for farmers, "which has reduced their expectations for strong financial performance in the coming year," said James Mintert of Purdue's Center for Commercial Agriculture.

Looking to the Sky: U.S. farmers are holding their breath on whether or not rainfall this summer will be sufficient to grow high-yielding crops. So are end users, such as ethanol producers. Stuart Rose, chairman for REX American Resources, said that the company is hoping for strong rainfall over the summer growing season, in order to keep a lid on the price they have to pay for their corn supply. Cash basis for corn in the U.S. has been higher than usual for this time of year, with farmers seen as reluctant to sell their crop ahead of time.

AHEAD

--The EIA will release its weekly ethanol production and stocks report at 10:30 a.m. ET Wednesday.

--The USDA will release its weekly export sales report at 8:30 a.m. ET Thursday.

--The USDA will release its monthly world supply and demand report at noon ET Friday.

--The CFTC will release its weekly commitment of traders report at 3:30 p.m. ET Friday.

Write to Kirk Maltais at [email protected]

(END) Dow Jones Newswires

06-06-23 1527ET