- Chicago values are mixed at midday with corn/soybeans firm, while the wheat market sags on diminished fund buying. Spread unwinding has been the morning’s feature with wheat/corn and soybean/corn spreads being exited.
- The volume of trade is average, but few end users desire to chase corn/ soybean markets higher amid favourable Central US weather. And US farmers are more willing sellers of stored old crop grain now that more regular rains are making their new crops. Sweeping bins is something that farmers will be engaged in to prepare for a large coming new crop. We anticipate a mixed close with December corn and November soybeans up against resistance at $3.39 and $8.95-9.05, respectively.
- FAS confirmed the China booked 522,000 my of US soybeans with another were 351,000 mt sold to an unknown destination (thought to be China). Of the total, 197,000 my was for old crop with the remainder for new crop. China has become a much more regular soybean buyer this week, and the hope is that China will continue to book 1.5-1.7 million mt/weekly going forward. Exporters report that China continues to seek additional US soybeans, while interest in wheat, corn, and soyoil appears to have temporarily abated.
- Chicago brokers estimate that funds have bought 9,700 contracts of corn and 5,700 contracts of soybeans, while selling 6,600 contracts of wheat. Funds have bought 4,300 contracts ofsoyoil and 2,100 contracts of soymeal.
- US weekly export sales for the week ending July 9 were; 28.1 million bu of wheat, 38.6 million bu of old crop and 25.8 million bu of new crop corn, and 11.5 million bu of old crop soybeans and 28.2 million bu of new crop. The corn and soybean sales totals were large, and they will be big again next week following daily announcements this week to China.
- On a known basis, China has now booked 2.1 million mt of old and 1.8 million of new crop corn. Adding in this week’s daily sales announcements, China has secured around 5.8 million mt of US corn in both crop years combined. Based on poor 2019 crop quality, we would suspect that 1 million mt of the US the old crop corn sale could get rolled forward to new crop. This means that China has nearly booked 5.0 million mt of 2020/21 US corn or 196 million bu. In terms of yield, this works out to 2.3 bushels/acre of the 2020 US corn crop. China has only shipped out 16.6 million bu of 84 million of old crop purchases. Between the US and Ukraine, China has fulfilled its TRQ corn purchase commitment for 2020.
- The UN is warning of a knock-on impact of Covid-19 with falls in demand that could result in sharp falls in grain/food values. Egypt’s GASC wheat tender secured less than desired tonnages as credit was not available to make the full purchase. Outside of China, world commodity demand is in fast retreat.
- Warm/wet is the GFS weather forecast over the next 14 days with the jet stream sagging further southward. The sagging jet stream allows temperatures to be slightly cooler (vs the overnight run) while providing a daily chance of Midwest/Plains rainfall. The 10-day rainfall outlook suggests that any heavy rain is focused across the Central and Southern Midwest. A front will hold across this area and became the focal point for frequent showers/storms. The regular rain along with modification in temperatures favours reproducing corn/soy crops. Crop condition ratings are expected to start rising again coming weeks. The 10-15 day forecast offers no extreme heat with ongoing rain. Midwest high temperatures hold in the 80′s to lower 90′s.
- The wheat market did not like that China did not show up as a buyer for 2 cargoes of US SRW wheat in the sales report. Soybean futures are firm on new fund buying while corn is supported by wheat/corn spread unwinding. The Central US weather forecast is warm/wet which favours yield. The long-range NOAA weather forecast did not offer any real concern for August rainfall or temperatures. Record US corn/soy yields are possible. We remain bearish amid large supplies/stocks.