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Top 5 Market Movers to Watch the Week of June 15

Top 5 Market Movers to Watch  the Week of June 15

USDA crop progress report, EPA final rule on biofuel blending, and US drought map are just some of the key events to watch next week!

This column tracks key events in commodity marketing impacting the agriculture industry! The series of article shares issues to watch the following week, issues that may have an impact on commodity prices in the coming weeks.

By Colin McNaughton Risk Management Intern

  1. The weekly USDA crop progress report will be delayed until Tuesday, June 20th as this coming Monday is “Juneteenth”, a national holiday in the states. There will be a continued focus on the crop conditions and sub/topsoil moisture levels. The latest report revealed an increase in the short-very short levels across the U.S. Topsoil S-VS (short - very short) levels increased by 2% while subsoil increased by 3%. Michigan continued to worsen as sub/topsoil moisture levels hit 86% and 91% respectively. If Monday evenings extended weather forecast and outlook remains dry and heat is added look out above!
  2. Amongst the reports that will be released next week are the USDA weekly export sales report on Friday, June 23rd, the EIA ethanol data on Thursday, June 22nd, and the USDA grains inspected for export on Tuesday, June 20th, all of which are pushed back to account for the holiday Monday. Grains inspected for export are still far below the levels at this time last year. To date, 31.1 mmt of corn have been inspected compared to 45.0 mmt at this time last year. For all grains, we sit at 82.0 mmt inspected, 20 mmt short of last years number. Hopes are that the upcoming report will show a step forward in closing the gap from last years numbers. We are one drought away from not only the funds to start panic buying but countries like China, Mexico and Japan could start to panic buy worried about securing future grain supplies.
  3. The U.S. Environmental Protection Agency (EPA) is expected to release the final rule on biofuel blending volume mandates for 2023-2025 by June 21. The EPA sought a one-week extension on the deadline for the rule, as revealed in a court document on Tuesday. The agency agreed to the extension with industry trade group Growth Energy, after originally being required to issue the final rule by Wednesday June 14th under a court order. The EPA stated that it will not seek any further extensions for the deadline. Traders may anticipate a rise in soyoil futures as the announcement approaches as RVO (Renewable Volume Obligations) requirements could come in higher than expected but higher soyoil futures may already be baking in the news ahead of the announcement.
  4. As the latest U.S. drought monitor map was released, eyes were on the key “I” states” as nearly 100% of Iowa, Indiana, and Illinois are suffering from at least D0-D$ (Abnormally dry) drought conditions. These 3 states produced 42% of the U.S. corn and 37% of U.S. soybeans in 2022. With no rain in the forecast over the next 10-14 days, combined with Monday, June 19th being a national U.S. holiday, corn futures are set to break the important $6.11/bu January 2023 high by next week. Many areas across the U.S. received spotty rains this week but not enough to cause a major reversal of these drought conditions. The drought monitor will be updated on Thursday, June 22nd.
  5. Water stress due to early signs of El Nino is affecting palm oil estates in Sabah, the largest palm oil-producing state in Malaysia. This is leading to reduced yields and compounding the challenges caused by under-fertilization and labor shortages experienced over the past three years. Malaysia, the world's second-largest palm oil producer, anticipates a weak to moderate El Nino event from June to November. The forecast predicts lower rainfall and a temperature increase of 0.5 to 1.0 degrees Celsius, which will continue to harm the industry and will continue to lower yields. Higher palm oil futures could spillover into a higher global vegetable oil complex like soyoil, soybeans and canola futures.

For daily information and updates on agriculture commodity marketing and price risk management for North American farmers, producers, and agribusiness visit the Risk Management Website to subscribe to the program.

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