The recent Supply and Demand report was uneventful, but traders are still worried about demand.
Jack Scoville, analyst with Price Futures Group, looked at the USDA’s projections for U.S. corn demand dropping, which — combined with more favorable weather forecasts toward the end of June — would make for bearish price action.
“USDA cut its current year export demand estimate on Friday by 50 million bushels in the latest WASDE updates,” Scoville said. “Corn is rolling leaves in southern Midwest areas, but most of the corn should be OK despite the warm and dry weather seen now.”
Soybean markets, on the other hand, are seeing strong domestic demand, as no changes were made to USDA expectations in the June 9 report.
“Old-crop export demand was cut by 15 million bushels, and this was added to ending stocks for the current and the next year,” Scoville said. “USDA left South American production estimates unchanged.”
Traders have been worried about the large South American crop, but all gains made by Brazil have likely been offset by Argentina’s poor growing conditions, forcing them to import from Brazil and taking that supply away.
Wheat markets are largely trading news from the Black Sea region as Russia and Ukraine continue to add to the volatile nature of the market.
“There is a lot of talk that Russia continues to offer a lot of wheat into the world market at very cheap prices to help keep demand for American wheat very low,” Scoville said. “Ideas that big Russian offers and cheaper Russian prices would be a feature for a while in the world market was the driving force for the weaker prices, but this could soon change if the spring wheat production is not good.”
