- Midday values are lower on fund selling and more aggressive cash selling of stored supply by farmers. The downside Chicago price leader has been wheat as the Plains harvest advances with big yields being reported. Corn had been the only bullish stalwart for the Chicago since May, and although US soybean seedings fell 4.5 million acres, the new crop shortfall is cushioned by record large US old crop supplies. The Chicago lacks a bull leader following USDA’s June Stocks and Seeding Report.
- December corn has found technical support at an open chart gap at $4.20. Lower prices nearby will depend on US crop condition ratings and Midwest weather. Supply bull markets are driven by fear and following the NASS corn seeding estimate, the acreage fear has abated. A new fear needs to be created by either additional flooding or hot/dry weather that adds new yield concern. For now, the acreage debate has shifted to the US yield debate.
- Chicago brokers report that funds have sold 11,000 contracts of corn, 6,500 contracts of wheat, and 4,500 contracts of soybeans. In soy products, funds have sold 3,400 contracts of soymeal and 2,100 contracts of soyoil. The funds are reducing their market exposure to Chicago amid improved US weather.
- US grain exports for the week ending June 27 were; 10.7 million bu of corn, 26.4 million bu of soybeans, and 22.4 million bu of wheat. US corn exports were well below trade expectations while soybeans and wheat were both in line.
- For their respective crop years to date, the US has exported 1,643 million bu of corn (down 158 million or 9%), 1,363 million bu of soybeans (down 462 million or 25%), and 69.6 million bu of wheat (up 15.2 million). The USDA is expected to reduce their 2019 US corn export estimate by 100-150 million bu and 25 million bu in the June WASDE. It is too early in the crop year to make any comments on US wheat exports with just 4 weeks completed.
- US SRW wheat is some $35/mt higher than Russian wheat FOB wheat offers for July/August. The steep US premium was initially justified by rising US corn values and the potential to feed more wheat. That need evaporated on Friday as US corn seeding did not fall as much as expected. The function of US wheat has shifted from trying to work back into US feed rations to trying to recapture lost export demand. The weakness of US wheat values will also weigh on corn.
- The initial Russian wheat harvest is showing surprisingly good protein levels with most above 13%. In fact, the spread between Russian 12.5% and 13.5% wheat keeps narrowing amid the abundance of Russian hi pro wheat. Some exporters expect that the spread will go to near zero in coming weeks.
- There is no evidence of fresh Chinese demand according to US exporters. US exporters are doubtful that China will show up for any sizeable US ag commodities nearby. Most argue that China will have to see progress on a US/ China trade deal for any fresh buying. US President Trump offered two concessions to China in promising not to raise tariffs and the relaxation of the Huawei telecommunications ban in the US for the trade talks to restart.
- The midday GFS weather forecast is slightly wetter than the overnight run for the E Midwest. The chances of rain are light and limited to afternoon thunderstorms into the weekend with most totals ranging from 0.25-1.00″. Heavier rains return next week across the S and E Midwest with rains of 0.5-1.50″.
- There is no evidence of any hot/dry weather and 10 days rainfall of 0.5-2.00″ is ideal now that crops are largely planted and established. Temperatures are cooler for next week which is a worry regarding reaching the finish line in maturity.
- It is weather, weather and weather that will be driving Chicago prices into the mid-August WASDE report. The forecast is favourable and funds are liquidating. The US/China will hang onto a trade war at least to year-end. A sinking Chicago that closely watches weather is expected.