- It has been a session of red across world raw material space as markets remain concerned over weak economic growth and a potential favourable pattern change in the US climate. Spot soyoil is flat, but otherwise commodity markets are weaker. EU milling wheat and corn futures look to end €0.25-1.25/mt lower. Spot gasoline futures are down $.04/gallon. The Dow is trading 20 points lower.
- Tropical Storm Barry continues to work across the Delta and Mid-South regions. Flooding rains have largely missed key corn/soy producing areas of LA, AR and MS. Instead, rainfall of 0.50-2.00” fell across areas immediately surrounding the MS River. Barry also looks to inch into the southern half of IL, IN and much of OH in the next 48 hours. Following recent dryness in the Eastern Midwest, coming precipitation will be welcomed. However, the market will continue to pay close attention to long range forecasts in NW MO, S IA and W IL. Dryness there has become a new threat to row crop yield potential. Steep declines in soil moisture will occur across much of the Central Plains and far W Corn Belt. The major forecasting models continue to hint at a favourable, and rather timely, pattern shift in late July, but it is very important this shift occurs.
- NOPA-member crush in June totalled 149 million bu, vs. 155 million in May. This is the lowest crush rate since Sep of 2017 and was 4-5 million bu below trade expectations.
- Mexican President Lopez Obrador has announced a policy initiative aimed at reducing Mexico’s reliance on sizeable corn and wheat imports to meet domestic consumption. Mexico now aims to reduce import tonnages of wheat and corn by 80% in the next 6 years using guaranteed minimum corn/wheat prices. Any policy change won’t affect 2019 demand, but a longer term global grain demand driver remains absent.
- Weekly US export inspections included 26.6 million bu of corn, vs. 28.4 million the prior week. A pace of 34 million bu of corn per week is needed to hit the USDA’s target. US wheat export inspections totalled 11.6 million bu, vs. 22.6 million the prior week. Soy inspections were a decent 31.4 million bu, vs. 28 million the previous week. 17 million bu of soy was loaded for Chinese shipments as China continues to ship its prior sales.
- For their respective crop years to date, the US has shipped 1,699 million bu of corn, down 11% from last year, 1,423 million of beans, down 24%, and 107 million bu of wheat, up 31% from this week a year ago. Pace analysis suggests USDA’s soy export forecast is now closer to accurate. Corn exports may be lowered another 25-50 million bu.
- Chinese GDP growth in the second quarter was 6.2%. This roughly matched trade expectations but also reflects the lowest quarterly growth since 1992. The CRB index has failed to post meaningful new highs since last June.
- The midday Central US GFS weather forecast is wetter in northern IA next Mon-Tues as cooler Canadian air moves farther southward than previously indicated. Otherwise, expansive high pressure ridging will keep precipitation confined to the N Plains and N and E Midwest. Areas of concern are declining, though rainfall will be needed in KS, NW MO, S IA and W IL by late month. The 11-15 day forecast includes light but widespread showers and much cooler temperatures, but it is key that this shift is pulled into the nearby outlook later this week.
- Price breaks and rallies will struggle to attract momentum prior to early August, when a bulk of Midwest corn will be pollinating. Direction thereafter will hinge upon whether climate forecast calling for cooler and wetter August weather verify.