- Chicago futures are lower at midday with corn, soybeans and wheat holding in the red. An early rally in wheat was not sustained with the summer row crops back pulling futures lower. Traders are loath to sell corn and soybeans more aggressively with a broad expectation that US corn/soy crop conditions will decline in the afternoon NASS report. Thereafter, it will be the location and amount of rain that will determine Chicago price action into the end of the week.
- Chicago brokers estimate that funds have sold 5,200 contracts of Chicago wheat, 9,800 contracts of Chicago corn, and 10,300 contracts of soybeans. Funds have also sold 5,700 contracts of soymeal and 3,400 contracts of soyoil. Funds are on the sell side across Chicago with farmers holding fast and not making sales.
- Technically, soybeans have fallen below their 20/50 day moving averages while corn has crossed the 50 day and is back to where the rally started before the June 30 acreage report. The wheat market is holding in a range.
- For the week ending July 9, the US exported 79 million bu of total grain, up 1.7 million bu from the past week, and up 5 million from last year. The US shipped out 35.5 million bu of corn, 17.7 million bu of soybeans, and 22.9 million bu of wheat. The wheat export pace was above trade expectations.
- For their respective crop years to date, the US has exported 1,385 million bu of corn (down 314 million or 22%), 1,391 million bu of soybeans (down 31 million or 2%) and, and 110 million bu of wheat (up 2 million or 2% at this early stage in the crop year). China shipped out last week 5.9 million bu of US soybeans or 33% of the total. The US corn and soybean export pace must pick up for the US to reach the July WASDE annual forecast.
- Brazil has now harvested 35% of their winter corn crop, which is below last year’s pace but will within the cutting pace of the past 5 years. Brazil remains active in selling corn abroad with prices well below the US Gulf. S American corn export prices are likely to steal US corn export demand well into Q4. Both Argentina and Brazil are looking for new feedgrain export opportunities.
- We hear that Ukraine has likely sold China 3 million mt of corn in the past 10 days which when combined with sales from the US under TRQ places the cumulative sales close to 5.0 million mt. This leaves 1-2 million mt of open world corn sales to China, but most exporters do not foresee China taking more than 2.5-3.0 million mt from the US during the 2020/21 crop year.
- World feed wheat sellers are scrambling for supply against rising Black Sea prices and a pure lack of feed wheat export availability. The spread between 11.5% and 12.5% protein wheat (Black Sea) has narrowed to $2-3/my which leaves Black Sea feed wheat shorts with huge losses. The Russian winter wheat crop is of high quality and testing 12-13.5% on their protein scale.
- The midday GFS weather forecast is less hot with a broad area of 1.00-3.00″ of rain covering IA, IL and IN during the remainder of the week. The mean position of the high-pressure ridge elongates and progresses east across the Delta/Gulf States and then retrogrades westward in the 9-15 day period. This produces a favourable NW upper air flow through the Midwest with seasonal temperatures and regular rain chances into July 30. Any real heat occurs from Friday through next Monday with more seasonal temperatures thereafter. Our confidence in the high-pressure ridge positioning being over the Western US during August if rising.
- Crop making rain is offered for the next 2 weeks with extreme heat not lasting. Our view stays bearish on corn/soy with wheat having sporadic rallies due to rising Black Sea prices. Any bounce to open chart gaps in corn/soybeans appear to be a sales opportunity. We would see rallies to $3.40+ December corn and $8.85+ in November soybeans as being solid sales levels. A turnaround Tuesday could offer such an opportunity to sell the gaps left from overnight. We anticipate a 1-2% decline in corn and soybean conditions this afternoon.