- Grains weaker at midday as Russian strike fails to disrupt Black Sea grain flows; Soy higher on positive demand news.
- Chicago ag markets are mixed at midday, with US wheat futures following Paris milling wheat contracts lower, soybeans hold onto Wednesday night’s rally amid improving export demand and larger than expected crush in July, and a meaningful contraction in soyoil stocks, and corn is caught in between. Spot Paris milling wheat has fallen to newer seasonal lows as concern over Russia’s strike on Odesa fades. Spot Russian wheat fob today is unchanged at $218/mt. We reiterate EU wheat futures perform poorly into September’s expiration, and newswires report Egypt has purchased no additional wheat via privately held talks this week.
- NOPA member soybean crush in July totalled 182.9 million bu, up 9.6 million year on year, above the trade’s guess of 182.4 and a record for the month. Sep-July NOPA crush of 2,018 million bu is up 5.1% on last year, which suggest USDA’s annual crush forecast may be too low by 10-20 million bu. However, the bigger surprise in NOPA’s July crush data is a drop in soyoil stocks to 1.50 billion lbs, down 27 million from last year and 100 million below the trade’s guess. Implied soyoil disappearance in July was an all-time record 2.31 billion lbs.
- Export sales data this x is mixed. US wheat demand is still middling, with sales in the week ending Aug 8 totalling 12.5 million bu, vs. 10.1 million the previous week. This matches exactly the pace needed to meet USDA’s forecast.
- Combined old and new crop corn sales were 36 million bu, vs. 29 million the previous week and vs. 37 million in the same week a year ago. Last year the acceleration in US corn export demand occurred beginning in early October, and it is important that sales increase at least modestly in the next 30 days. We would note that US corn is still cheap in the global marketplace, with spot Ukrainian offers on Thursday quoted an incredible $1.44/bu above Chicago futures (vs. Gulf basis of $0.80 over), but demand isn’t yet exciting enough to offset the market’s focus on US yield/supply.
- Old/new crop soybean sales were 58 million bu, vs. 48 million last week and vs. 50 million in mid-August 2023. Even larger sales are expected next week following recent daily announcements, but it is the goal of the market to encourage significant export demand expansion between now and January. Central Midwest yields will be at/slightly above USDA forecasts. Fortunately, world cash market price spreads favour US origin into mid-winter.
- Spot WTI crude at midday is up $1.40/barrel at $78.40. Resistance lies at $79-80. The Dow has extended its overnight rally to 460 points. The US dollar has recovered slightly after testing early August’s low on Thursday.
- The Central US midday GFS weather forecast is drier in the Great Lakes/Eastern Midwest in the 6-10-day period but is otherwise unchanged. Helpful rain is still scheduled to impact IL and the Upper Great Lakes over the next 24 hours, with additional totals of 1.00-1.25” offered to IL/WI. A drier trend is established elsewhere, and a lengthy period of dryness blankets all but the Upper Midwest Aug 17-30. The dominant feature of the US climate in the second half of August will be the expansion of high pressure aloft. Heat returns to the Plains and Delta/Southeast, while ridge-riding thunderstorms favour a path that includes northern SD, northern IA, MN, WI, and MI.
- Russia’s attack on Odesa is unlikely to impact near-term grain flows, and Pro Farmer’s tour next week keeps US yields as the market’s focus point. We would maintain that it is choppiness that defines price discovery in the short run. A demand-led recovery lies ahead in corn, while China still must price sizeable tonnages of US soy. US wheat’s inability to fully follow EU futures is noteworthy.