- HEADLINES: Chicago bounces from aggressive early selling on crop condition fall expectations; China demand lacking.
- Chicago prices initially break hard; find end user support and bounce into midday. China commodity import demand questioned as economy slows; Needed rain starts to fall across eastern Nebraska and western Iowa.
- Chicago grain futures are lower at midday but bouncing from initial sharp opening losses on end user pricing and bottom picking. Soybeans lost well over 65 cents/bu at one point with wheat/corn futures both down over $0.20/bu. As the US stock market started to recover, so did most commodity markets. Soyoil and wheat have tried to pace the rally, pulling soybeans, soymeal, and corn along. The W Midwest rainfall will most aid US soybeans with the crop in the reproductive period of development. Corn yield gain during the fill process is likely limited to 5-10%.
- There is more certainty of US corn/soybean and spring wheat production amid improved weather, traders will be looking to cash basis and export demand trends for price direction. Chicago will be shifting its focus to demand by the end of August, after a series of private crop tours pull through the Midwest in the next 2 weeks. Pro Farmer have an east and west tour leg that begins next week Monday.
- We look for a lower close today, with the mid-session rally based on the expectation for US corn/soybean crop conditions to fall 1-2% later today. If the projected improved weather verifies, future US corn/soybean crop ratings should rise or hold steady in the weeks ahead. We doubt that either Chicago rallies or breaks will be sustained with choppiness to persist into the end of August.
- US weekly Export Inspections for the week ending August 11 were 21.1 million bu of corn, 27.4 million bu of soybeans, and 13.7 million bu of wheat. The wheat and corn totals were less than traders had hoped for. For their respective crop years to date, the US has shipped out 2,089 million bu of corn (down 458 million or 18% from the prior year), 2,031 million bu of soybeans (down 128 million or 6%) and 142.7 million bu of US wheat (down 43 million or 23%). US export demand continues to struggle, outside of US old crop corn and soybean exports to China.
- NOPA reported a July soybean crush rate of 170.2 million bu, slightly less than expectations of 171.0 million bu. The crush rate was in line to reach the USDA/WASDE estimate of 2,205 million bu. The soyoil stocks decline is related to the ongoing pull of renewable diesel, a market factor that will loom increasingly more important in the months ahead. We see the NOPA data as being neutral to friendly to soyoil.
- The International Research Institute for Climate (IRI) issued their long-range forecasts today. The forecast calls for drought risk across Argentina/S Brazil. IRI has been consistent in calling for an early season drought across much of Argentina and S Brazil as La Niña hangs on for the third year in a row. The US is forecast to see above to much above normal temperatures through November with the Southern third of the US holding in an expanding drought pattern. The 2022 S American spring planting season looks to have some issues with ongoing dryness.
- An improved rainfall pattern is forecast for the Midwest, Delta, and the S Plains over the next week as broad ridge/trough pattern forms across North America. Showers have pushed into W Iowa with the system expected to push south and east into S MO/S IL in the next 36 hours. Rainfall totals are forecast in a range of 0.5-1.25”. A second system is noted for the weekend which includes North Dakota. The pattern set up offers regular rains for the S Plains, Delta, and the W Midwest. Near normal rain is forecast for the E Midwest.
- The bulls hope for another 2-3% decline in corn/soybean good/excellent conditions this afternoon to bolster prices on Tuesday. The bears point to weather and the time of the year with harvest dead ahead We doubt that either a bull or bear move can be sustained without more certainty on world economies and demand. Trade the range. China will need to secure additional US corn and soybeans to sustain a demand bull market. For political reasons, that does not look to occur with US/China relations at a low point following the visit of Pelosi and other congress people to Taiwan.