- Strategie Grains slashes EU maize crop forecast by 10 million mt on drought. Consultancy Strategie Grains cuts forecast for EU-27 maize crop in 2022/23 to 55.4 million mt, a 15-year low, from 65.4 million mt forecast last month
- HEADLINES: Chicago adds premium on the hope for a drop in US yield; US grain export sales stay slow.
- Chicago futures add risk premium on new fund inflows. US producer price data helps confirm that inflationary price pressures peaked in June. USDA report ahead with eyes on crop tours and central US weather into Labor Day Holiday.
- US grain futures are higher at midday with old crop soybean futures leading the charge (once again). Exceptionally tight old crop US soybean stocks with US ethanol producers searching for old crop corn to bridge the gap with new crop has helped support the morning rally. And fund buying inflows have pushed November soybeans back to challenging $14.50 and December corn $6.30 resistance.
- Chicago wheat has rallied against the steady September Paris wheat futures as the US cash market firms. Plains cash wheat and sorghum basis bids are firm, as cattle feeders cope with their regional corn shortages.
- We look for a higher Chicago close, with traders paring some of their net position exposure ahead of the USDA August Crop Report. Market reactions to USDA reports has been bearish since May, it will be important to see if the market can buck that trend. Following this week’s rally, traders are expected to fade a bullish USDA report with the new crop harvest dead ahead.
- Chicago brokers advise that managed money has purchased 5,600 contracts of corn, 4,300 contracts of wheat, and 6,900 contracts of soybeans. In soy products, funds have purchased 3,200 contracts of soyoil and 1,900 contracts of soymeal. The volume of Chicago trade has been light and it does not require much volume to push valuations.
- The FAS/USDA weekly export sales report reflected net new sales of 13.2 million bu of US wheat, net cancelations of 2.5 million bu of old crop and purchases of 17.5 million bu of new crop soybeans, and 7.6 million of old and like amount of new crop. The US export sales pace is pitifully slow, with demand not stepping forward ahead of the 2022 summer row crop harvest. China, and most importers, are close bought and securing their needs hand to mouth.
- For their respective crop years to date, the US has sold 316 million bu of wheat, down 4.0 million from last year. US white wheat sales are up 11 million bu against smaller purchases in other classes. US 2021/22 corn sales rest at 2,395 million bu (down 364 million or 13%), with US 2021/22 soybean sales at 2,184 million bu (down 93 million or 4%). The good news is that there are 578 million bu of new crop US soybeans and 317 million bu of new crop corn sales on the books.
- The USDA reported that 103,400 mt of US soymeal to Mexico in 2022/23. The sale was seen as routine as Mexico will import 1.47 million mt of US soybean in the 2021/22 crop year. Mexico is one of the US’s largest importers of soymeal.
- And be aware that FSA will be releasing 2022 Certified and Prevent Plant acres by Crop at 1:00 PM CT. This report over the years has caused market reactions and confusion based on the completeness of the data. 2022 data certifications should be well along, but it is September data that will cause NASS to update final 2022 seeding.
- The midday GFS weather forecast follows the overnight forecast with mostly dry weather across the Central US. A few light showers are possible across MN/IA from a passing weak front with rain totals of 0.2-0.6”. Dry weather then returns for the weekend with the next system impacting E and S Missouri with rains of 0.5-1.50”. The remainder of the Plains and the W Midwest holds in an arid upper air flow into next weekend.
- The amplified ridge/trough pattern pushes any extreme heat further west into the Intermountain West. A cool upper air flow occurs across the Midwest with temperatures in the 70’s to mid-80’s, mild. Lows will be in the 50’s to the mid 60’s. Several good rains are needed to finish 2022 US corn/soy crops, but they are not forecast by the GFS forecast. We await the EU model output which has placed better rain across the C Plains and the dry areas of the W Midwest.
- Good luck with the USDA August report on Friday! Traders are leaning to lower than estimated yields and a bullish report surprise. Confidence around NASS August yield estimates are always low. It Is the September report that will hold the market’s attention. We remain a long-term bull, but the run up in price ahead of the USDA report and harvest makes it tough to chase a rally. A bullish report could produce profit taking amid the weakening old to new crop cash market.