- Chicago recovers on rising cash basis bids; Egypt receives wheat offers with Russia the lowest offer at $226/mt; GFS weather forecast unchanged at midday.
- Chicago grain futures are mixed at midday with wheat futures sagging to new lows on additional speculative selling while corn/soybean values are stabilising following Monday’s lashing. Like August of 2020, the damage from strong windstorms across Eastern Iowa and NW Illinois can only be known by satellite maps that help define areas of flattened corn. The market is aware of some toppling of corn during pollination, but the degree is unknown. A cautious approach to crop damage is being taken.
- Monday’s Chicago open interest data reflect that managed money was not big sellers of corn but added to their net short positions in wheat/soybeans. Open interest fell 1,419 contracts in corn, while rising 3,868 contracts in soybeans and 4,786 contracts in Chicago wheat. Monday’s big gain was in soyoil with open interest up a strong 12,745 contracts. Soyoil is attracting end user pricing on breaks which has to be closely followed.
- Egypt’s GASC received wheat offers for September wheat with the lowest offer being $226/mt for Russian origin. The most recent sale of wheat to GASC was completed at $227/mt, so the current offer is down $1.00/mt for a more forward sale period. The world wheat market is holding much better than Chicago where speculative selling is ongoing based on bearish charts. Russian fob wheat is said to be bid at $215/mt and offered at $219/mt, little changed in recent weeks. It appears from harvest data, that Russian wheat crop estimates are again starting to slide, and SW Russian corn yield are being adversely impacted by the heat/dryness that persists.
- Ukraine’s corn yield could fall by 30-35% according due to extreme heat/ dryness according to the Ukraine Agrarian Council in a forecast that was made today. Such a yield decline would drop Ukraine’s 2024 corn production to 18-19.4 million mt. Such production would drop their exportable corn supplies to 15.5-16.5 million mt vs USDA’s current forecast of 24.50 million. The loss of 8-9.0 million mt of Ukraine corn trade is important to the world balance sheet and further makes the coming US corn export program look to be too modest. Ukraine fob corn offers keep rising as farmer’s there hold back on sales. Note that Eastern Europe is also enduring the same heat/dryness with Ukraine corn imports becoming more feasible. Non-US corn exportable corn supplies are in decline which should push demand to Brazil, Argentina, and the US.
- China is showing up in the Brazilian vessel line up as being a buyer of more than 900,000 mt of corn. China again appears to be targeting Brazilian corn. The import margin of US corn into China is at one of the highest levels in years at over $1.50/bu. Traders expect that China will take Brazilian corn but remember that US corn is not out of the question for importers that desire to use their TRQ allocations.
- The midday GFS weather forecast is similar to the overnight forecast with rain across the Gulf States, Delta and the Southern Midwest. The NW Midwest and the Northern Plains hold in a drier pattern. A warmer/drier pattern unfolds following July 25 which persists into early August. The only real concern is the lack of rain across the NW Midwest and the N Plains.
- Chicago is paying more attention to cash markets today with corn/soy basis levels firming as end users try to stimulate movement. US and Black Sea farmers are tight holders of grain. The premium of the cash market is unusual heading into late summer with US farmers holding 1,877 million bu of corn and 345 million bu of soybeans. Ukraine and Brazilian fob corn basis continues to firm in the background. The US is in position to be a near record exporter of corn in 2024/25.