- The week has started lower in Chicago grains, corn and wheat, today whilst soybean are just trading in positive territory. Selling in the grains may well be linked to the USDA July report scheduled for release tomorrow. The trade is anticipating an increase in the US 2016 all wheat crop and a cut in US corn feed and residual volumes based on 3rd quarter demand patterns. Both would add to end stocks and added to the global grains situation this has triggered selling momentum, not unsurprisingly. US old crop soybean stocks will likely decline with new crop stocks holding steady on additional acres. However, the market is still attempting to reconcile weather and the possibility of a hot and/or dry August. The soybean balance sheet is somewhat more fragile than that of the grains and has limited room to accommodate any new crop supply losses.
- It feels appropriate to ease back somewhat on our bearish mentality on the worrisome weather forecast of excessive heat/dryness that starts next week. Midwest crops today are favorable with adequate soil moisture. The big question going forward is whether a more adverse weather will develop to impact as much as 10% of the US corn yield in the fill stage and have a more important impact on soybeans. The debate of good crops today and bad weather tomorrow will most likely persist into the end of the week.
- In other news today, SovEcon has increased its estimate of Russian 2016 wheat output to 66.1 million mt from 64.4 million mt previously. IKAR reported Russian 12.5% protein wheat to be priced at £165/mt, which is some $7/mt lower than a week ago, other similar reduced price levels are also noted, the progress of harvest appears to be the driver.