- Carryover technical fund selling has pressured Chicago this morning as funds continue to shed stale length. Wheat has been the downside price leader with corn/soy futures in tow. December corn has fallen back to the 200-day moving average at $4.065 which is offering some initial support, but it is the pressure from declining US wheat futures that is the keeping pressure on the summer row crops.
- September Chicago wheat has fallen to fresh lows since the early July high was scored which is pushing funds to exit all length. The late May lows at $4.74 are offering some support, but Sept wheat futures appears to be heading back to long term support offered at $4.00-4.10 basis spot KC wheat and $4.55-4.65 Chicago. US wheat lacks an export story with sales starting to decline amid cheaper world values. And the spring wheat harvest will start to gain speed in coming weeks which will add to the high protein world wheat supply.
- We caution about becoming too bearish corn, wheat or soybeans on this break with the key August crop report still ahead. Chicago has declined to key support and initial downside price targets. We would not advise new sales here and this would be a good level for consumers to add to forward coverage.
- Chicago brokers estimate that funds have sold 9,000 contracts of wheat, 13,000 contracts of corn and 4,500 contracts of soybeans. In soy products, funds have sold 3,200 contracts of soymeal and 2,100 contracts of soyoil. The fund selling in the grains has been much larger than the soy complex as they are still shedding market length. Funds are marginally short in soybeans.
- US weekly export sales for the week ending July 25 included 14.1 million bu of wheat, 10.7 million bu of corn (both crop years combined), and 16.5 million bu of soybeans (both crop years combined). The sales were paltry and reflect the large premiums that US corn/wheat is offered in the world marketplace. US soybeans are more in line with S American fob offers, but Chinese demand is not evident which limits US new crop sales.
- For their respective crop years to date, the US has sold 327 million bu of US wheat (up 63 million or 24%), US old crop corn sales stand at 1,964 million bu (down 373 million or 16%) while US soybean sales stand at 1,790 million bu (down 346 million or 16%). Research maintains that WASDE should trim US 2018/19 corn exports another 75-100 million bu while reducing US 2018/19 soybean exports by 20-25 million. It is too early in the crop year to make any comment on the USDA annual export estimate for wheat.
- Illinois, Indiana and Ohio producers are bemoaning July’s dry weather and the stress that it is producing on corn/soy crops. Shallow rooted crops struggle for moisture and yield potential is being harmed. Rain is in immediate need.
- The midday Central US GFS weather forecast has shifted rainfall next week from the Southern and Eastern Midwest into IA, MN, WI and northern IL. The models in the days ahead will continue to work out details surrounding next week’s precipitation. A wetter pattern lies ahead, but confidence in exact rainfall placement and amounts is low.
- The GFS forecast allows high pressure riding to return to the Southern Plains. This will push the mean position of the jet stream into the Dakotas and Upper Midwest early next week and beyond. Meaningful rainfall will favour the North, but again much of IL looks to be short-changed.
- Dec corn has fallen to key support and a trading low is being formed. This is no place to be turning bearish of corn, soybeans or wheat with so much still unknown about 2019 US summer row crop sizes. Bottoms should be forming with some sort of short covering bounce expected into the August 12 USDA report. Research is tilting short term bullish for a bounce into the close.