- China securing additional US soybean cargoes; Wheat recovers on world crop losses; GFS weather forecast pulls tropical storm across N Florida.
- Wheat bucking Chicago downtrend with rally; Corn/soybean futures fall to another set of new lows. End user pricing offering support; Talk has China asking for US Gulf soybean offers for October with reported 6-8 cargoes being sold.
- Chicago volume is substantially less than yesterday which has helped fuel volatility. US financial markets have witnessed increased volatility as the DOW traded nearly 550 points lower but is holding right at key chart support heading into the August Jobs Report tomorrow. Weekly unemployment claims rose to their highest level in 11 months at 249,000, which has the US bond market raising their forecast to 3 interest rate reductions. The slowing labour market will push the US Central Bank to back down on rates as one of its mandates, full employment, is in doubt. The slowing US economic growth outlook is what pulled the US equity market lower and caused an unwind of long stocks/short commodity trades. The Algo/AI selling was active in Chicago in the morning but has since slowed down at midday. It is taking much greater volume to force Chicago values lower as end users are using the break to add to forward coverage. And China appears to be back as a US soybean buyer and they should become more active next week.
- The USDA announced a daily sale of 132,000 mt of US soybeans to China. We hear from cash connected sources, that China purchases of US soybeans is up to 6-8 cargoes for October/November. And offers are still being sought.
- FAS/USDA indicated that for the week ending July 25, the US sold 10.5 million bu of wheat, 34.6 million bu of corn, and 37 million bu of soybeans (both crop years combined in corn/soybeans). The soybean sales were larger than expected and did not include any sizeable demand by China. For their respective crop years to date, the US has sold 305 million bu of wheat (up 90 million or 42%), 2,174 million bu of corn (up 593 million or 37%), and 1,672 million bu of soybeans (down 266 million or 14%). The US is on pace to reach USDA’s 2023/24 soybean export estimate of 1,700 million bu, while 2023/24 US corn exports could rise by 15 million bu to 2,240 million. It is far too early to make any US export assessment on wheat, other than to suggest that the EU could import HRS/HRW wheat to help its poor crop reach domestic milling specifications.
- China’s Vice Premier (Liu Guozhong) called on local authorities to minimise agricultural losses and ensure a robust autumn harvest as spring drought and recent torrential flooding has caused growing crop losses. The flooding in Henan, Jilin, and Heilongjiang has even caused quality questions of the grain in storage. Unfortunately, the forecast calls for additional flooding rain across the North China Plain with 30-day rainfall accumulations estimated at 10-24” for 43% of China’s corn crop. China allocated $277 mil in disaster assistance yesterday to financially aid farmers struggling with crop losses.
- The Central US GFS midday weather forecast has a tropical storm going further east and making landfall across Sarasota. The storm then heads back out int the Atlantic across the Carolinas with flooding rainfall of 4-8.00” in between. The forecast models are having difficulty with the exact location of the new tropical system that is forming in the Caribbean. Be prepared for large run to run changes until the hurricane forms. Otherwise, the midday forecast is drier/warmer nearby for the Plains, W Midwest, and the Canadian Prairies. Ridge riding storms are likely across the E Midwest with the extended range weather pattern in question until the path of the developing hurricane is known.
- China is back in the US soybean market and are they also seeking US sorghum. China has purchased 1 million mt of Brazilian corn but has not secured any US corn for 2024/25. The interesting price aspect of the world corn market is that the US Gulf corn is $6-7/mt cheaper than Brazilian, and $14/mt cheaper than Ukraine if China needed corn in size. The world has lost 23-24 million mt of wheat (10 million Russian/10 million EU and 3-4 million of Ukraine) which cannot be made up in the S Hemisphere. To be bearish, you need a US 2024 corn yield above 186 bushels/acre.