- Chicago mixed at midday as volume thins ahead of Friday’s July WASDE Report; Midday GFS weather forecast drier with heat across the N Plains; US Dollar declines on slowing inflation.
- Short covering has featured ahead of Friday’s USDA July Crop Report. Wheat has witnessed the heaviest covering, while more modest totals are being tossed about in corn/soybeans. Also, active corn spreading has been featured with the September/December spread pushing into 7 cents and then moving back out to 11 cents. And the rally in soyoil has jumped crush margins back higher with spot board crush at back over $1.52/bu with oil share pushing out to 41%. There is a bullish undertone in wheat/corn, while the soy complex languishes awaiting additional Chinese demand.
- Chicago brokers estimate that managed money has secured 6,200 contracts of wheat, 3,500 contracts of corn, and 1,200 contracts of soybeans. In the products, managed money has sold 3,100 contracts of soymeal and 4,200 contracts of oil.
- US weekly export sales were disappointing in the US holiday week. The US sold 8.8 million bu of wheat, 25.8 million bu of corn (21.2 old and 4.6 new crop) and 14.6 million bu of soybeans (7.6 old and 7.0 new). For their respective crop years to date, the US has sold 262 million bu of US wheat (up 78 million or 43%), 2,136 million bu of corn (up 582 million or 37%), and 1,653 million bu of soybeans (down 276 million or 14%).
- There were early day rumours that China was seeking US corn. We cannot confirm any US corn interest, but China does appear to be willing to ask for offers on Brazilian corn for September/October shipment. Export sources argue that China has purchased modest amounts of Brazilian corn for September. Last year, Brazil had a monster China purchase program. This year, China has been far more patient with corn/soybean purchases for autumn delivery. US new crop soybean futures are in decline seeking an increase in China interest. Normally, China is a price sensitive buyer, but the political rhetoric this year has importers not wanting to get caught with additional tax beyond the installation of the next US President on January 20.
- The value of the US dollar fell sharply following the confirmation of negative price growth in the US economy. The CPI, a broad measure of the cost of US goods fell 0.1% in June with a decline in gasoline prices helping to offset modest gains in foods. The year on year CPI rose 3%, down 0.3% from May. The decline in the US inflation rate should spur the US Central Bank to initially start cutting interest rates in September. The June CPI was the first time since May of 2020 that the monthly inflation rate showed a decline. We are now raising the risk that the US Central Bank will cut their lending rate in September and again in Q4. The US economy is slowing now that the US labour market is balanced. A falling US dollar will be bullish to commodities.
- Russian fob wheat offers stand at $218/mt, steady with last Friday. Black Sea dryness and extreme heat is causing farmers to slow any new cash sales.
- The jet stream is migrating northward which will leave most of the Plains, Delta and the Midwest with limited rainfall for the next 10 days. One short wave pulls through the lower Midwest in the last half of next week producing rainfall of 0.15-1.00”. Heat will be returning to the Plains, Delta and the W Midwest with highs routinely in the 90’s and a few lower 100’s. More seasonal upper 70’s to mid-80’s will prevail across the remainder of the Midwest. The warmer/drier forecast will draw down Central US soil moisture. However, any extreme heat will hold across the Northern Intermountain West with record lower 100’s possible. The Northern Plains will see the warmest/driest weather into early August which is the crop area at the biggest risk.
- The USDA reports on Friday are widely expected to bearish with growing new crop US corn and wheat stocks. US 2024/25 soybean stocks could fall on reduced seeded acres, depending on how the USDA sees future China demand. China has a flotilla of Brazilian soybeans heading in their direction. China is asking for offers on US October/November soybeans and Brazilian corn. No new sales can be confirmed. Crop weather for the rest of the US 2024 growing season holds the key for prices.