Rain on the brain
It is such a tired and overused phrase, I am remiss in using it, but it would appear that the primary motivation in the grain and soy markets is the belief that “rain makes grain.” It may be just as appropriate to say the trade has “rain on the brain.” At this point, we have not quite reached down to last week’s low point and remain in what appears to be an A,B,C corrective swing, but bears seem to be holding the better hand for the time being.
There was little in the weekly export sales number to excite either bull or bear, and numbers for both corn and beans were towards the lower end of expectations. For the week ending June 17th, we sold 216,300 MT or 8.5 million bushels of current crop year corn. This was 1200% better than last week but still 33% below the 4-week average. China was the best purchaser with 180.1k MT or 83% of the total, followed by Japan in for 149.1k and Mexico taking 102.5k. There were reductions of around 275k MT, primarily from unknown. For the new crop year, we sold 310,800 MT or 12.2 million bushels. The top buyer was unknown destinations taking 242.8k MT, followed by Japan for 50k. Old crop bean sales remain in the positive column as we sold another 141,700 MT or 5.2 million bushels. Japan was the top buyer with 83.7k MT, followed by Indonesia at 66.2k and then China in for 66k. There were reductions of 103k. For the 21/22 crop year, we sold a paltry 47.3k MT, but of course, we know that number will be significantly larger on next week’s report. This morning in the daily system, the USDA reported sales of 260,000 MT of beans to unknown destinations as well as 132,000 to China. Wheat sales were 30% above the previous week, coming through at 374,100 MT or 13.7 million bushels. Unknow destinations stood in the top slot with 110.6k MT, followed by Mexico taking 94.5k and then Nigeria at 76.6k. The only other items of note were a good rebound in soy meal sales, and in the meats, beef sales jumped 31% to 16,900 MT, and pork sales were 2% lower at 28,600 MT. China was a buyer of 2,000 MT of pork.
The 2021 grain harvest has started in Russia, beginning with winter barley and wheat soon to follow. While they have experienced a few challenges throughout the spring, favorable weather as the crops have matured have raised prospect. Sovecon recently raised its estimate for wheat by 2.2 MMT to 84.6 MMT. If correct, this would be down 1.3 MMT from last year.
We do have a slew of economic releases this morning. The May Advance Durable Goods figure came in at +2.3% compared with an estimate of 2.6%. The first quarter Final GDP figure was unchanged from the preliminary at +6.4% and was the Final PCE Price Index, which registered +3.7%. For the second week in a row, the initial jobless claims figures were disappointing. After climbing above the 400,000-mark last week, we only slipped 7,000 this week to 411,000. Economists were expecting the number to have dropped to 380,000.
