• Chicago soybean and meal markets were lower overnight and higher at Monday’s close. The soymeal market has found good demand on the recent break and led Monday’s trade higher, which lifted crush spreads for the fourth consecutive day and put December back at $1.70/bu.

• After the close, NASS reported another 1% decline in national good/excellent crop condition ratings to 66%. Good/excellent ratings fell in 13 of the 18 states reported, with the largest weekly decline of 11% occurring in ND. Ratings fell by 3% or more in 4 states, while good/excellent ratings in MO were down another 2% to just 32%. Mother nature is quickly taking yield potential away from the crop, and the market now awaits the results of the Pro Farmer Crop Tour next week, to better gauge crop potential. Much of the US soy crop is need of a good rain, which will continue to trim yield prospects. Record yields are now priced in, and we expect broad ranging trade to unfold into harvest.

• Dec corn settled one cent lower, but well off session lows, as the rest of the world had a chance to digest the USDA’s Aug report. Aug yield estimates offers little guidance to changes in September. There’s little doubt yield will be high, but just how high is still unknown. Coming rainfall will help. Crop ratings fell another 1% to 70% good/excellent.

• Our thesis remains centered on high yields but also enlarged demand. Drought in Europe shows no sign of easing into late August. Crop finishing weather in Ukraine and Southern Russia will also be warmer/drier than desired. Export inspections continue to match the pace needed to hit the USDA’s old crop target. And Gulf corn this evening is the world’s cheapest feedgrain. Argentine corn is competitive, but Argi offers are absent beyond October.

• Downside risk in crude is limited below $67, basis spot, which will act to sustain rather lofty ethanol blend margins. Demand will likely be strong, and the effect of this season’s heat (73% of the crop is in dent, vs. 56% on average) will be known only at harvest.

• World wheat futures ended lower as the European market was allowed to react to the US

• We view the USDA’s wheat data as neutral relative to current prices, but futures in Europe were well overbought. World production wasn’t cut as much as expected, and a correction ensued. The week’s lows were likely posted today.

• We note that interior Russian prices have soared in the last two weeks. This is especially evident at areas near ports. There is still concern over eventual controls on Russian exports, which actually pushes exporters to maximise shipments in the very near term. However, this suggests that beyond mid-autumn, world trade will be forced to other origins.

• NSW in E Australia will stay completely dry. Near record temperatures were recorded in Canada over the weekend. There is just not much to support a break below $5.60, basis Dec KC. Egypt is seeking wheat for late Sep arrival. The results of the tender (price, especially) will be highly anticipated.

• Russia’s grain exports have started to show the first signs of a slowdown since quality concerns over this year’s crop pushed prices to five-year highs, data from the agriculture ministry showed Monday. Weekly grain exports dropped from over 1.4 million mt last week to 914,000 mt in the week to August 13, according to agriculture ministry data. While the quick pace of exports at the start of the marketing year has meant volumes remain 55% higher than where they were 12 months ago, the gap with previous years continues to narrow. Total grain exports now stand at 5.65 million mt.

• Hot, dry weather during the wheat crop’s development cut yields back significantly, while rains during the later stages of development affected its quality and left much of it unsuited to human consumption. Wheat exports showed the biggest fall in volume terms over the week, with exports down a third from last week to 832,000 mt. Total wheat exports now stand at 4.63 million mt, which is 92% higher than at the same stage last year, although this has dropped back from 222% just a fortnight ago.

• Line up data from Russian ports has shown the number of vessels loading or waiting to be loaded in Black Sea ports has shrunk since the start of the marketing year. Tight milling wheat supply has left counterparts washing out previously agreed deals because they cannot secure enough wheat from the domestic market, while the number of new trades in the cash market has slowed to a trickle. And it is not just wheat that has shown signs of slowing down, with this year’s barley crop suffering similarly to wheat.

• Barley, which has also seen prices spike since the start of the marketing year, had exports fall by two-thirds week-on-week to just 42,000 mt– one of the lowest weekly totals in more than a year. Total barley exports since July 1 now stand at 683,000 mt, which is 12% lower than at the same stage last year.

• Corn exports, which are yet to kick off properly before harvest gets underway in the coming weeks, were up 31,000 mt last week to leave total exports at 288,000 mt – 35% lower than at this stage last year.

Brgds
Simon