Agriculture Market: Supply Overshadows Demand

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Agriculture futures hit from estimates of stronger-than-expected supply, while demand expectations remaining relatively stable.

Wheat

Wheat futures’ bullish momentum broke on strong crop from US
  • Front-month wheat futures are traded below $6.15 per bushel mark after dropping to a six-week low of $6.1, as dry weather and frosts affected key growing regions in Russia, the world’s largest grain exporter.
  • Analysts have reduced their 2024 harvest estimates for Russia by over 10%, leading to a significant price increase.
  • In contrast, the US shows signs of a strong crop, with 6% of the winter wheat harvest completed, surpassing the five-year average, with the best crop conditions in three years.
  • Drier weather in Argentina allowed the country’s wheat farmers to plant more than a fifth of this season’s crop last week.
  • Despite positive news from the U.S. which tempered prices slightly, global wheat stockpiles are still projected to hit a nine-year low, according to the latest WASDE report.
Corn

Prices strengthened as corn production eases
  • Corn futures climbed above $4.5 per bushel, rebounding from a six-week low of $4.39 observed on June 5th, amid uncertainties surrounding U.S. corn plantings and yield for 2024.
  • Analysts anticipate minimal adjustments in the 14.86 billion bushel production estimate but foresee a slight reduction in the new-crop ending corn stocks estimate to 2.048 billion bushels, souring the supply outlook.
  • Additionally, pest issues are affecting corn production in Argentina.
  • On the demand side, corn exports remain robust, surpassing USDA’s weekly inspection goal, further supporting corn prices.
Soybeans

Soybeans futures struggle to uptick as supply surpasses demand
  • Soybean futures were below $11.8 per bushel in June, the lowest level in nearly six weeks, amid expectations of higher supply and steady demand.
  • In its most recent WASDE report, the USDA upwardly revised its US beginning and ending stocks for the upcoming 2024/25 marketing year as lower crush forecasts lifted expectations on the domestic inventory.
  • Supply was also supported by the good quality of USDA’s oilseed ratings.
  • Furthermore, China, one of the largest soybean importers, is increasing its domestic supply, further driving prices down.