- US export data has been released as follows:
- The sales of corn, soybeans and wheat were all above trade expectations and considered supportive to price.
- It has been hard to kick the “bearishness” in grains with the charts pointing down and funds piling into larger net short positions. World wheat prices are edging lower following the GASC tender, which is also leaning on corn. The world wheat market is not understanding Russian logistical constraints, and that Asian demand that will not be filled by Australia/Canada this year due to smaller crops. This demand will therefore likely be pushed to the US. There is more to the outlook of world wheat prices than a Russian crop of 78-80 million mt. The 2017 Russian wheat crop is record large, up 5-7 million mt from last year. However, combined 2017 Australian/Canadian crops will be down nearly 20 million mt with the US crop off 15.50 million mt for combined net losses of these three primary wheat exporters of 35-36 million mt in 2017/18. Add in another 1 million loss of US wheat due to greater abandonment of US HRS, and an EU wheat crop at 146.5-147.5 million mt (down 1.5-3.0 million), non Russian exporter wheat supplies will be off 40 million mt.
- US soybean futures are higher on the disappointing rains that fell across IA and Central IL. This fat area of the Midwest remains short to very short on soil moisture and a finishing rain event is demanded to prevent pod abortion. This is no place to turn bearish of corn, soybeans or wheat with the downside price risk estimated at another 5-15 cents. August rainfall will not reach normal levels, and unfortunately will follow in the dry trends of June/July.
- The US Climate Prediction Center called for below normal temperatures for the C Plains and equal chances of above or below normal temperatures for the remainder of the Midwest. Of course, growers will be hoping for another extended growing season. The long range EU and now CPC argues for a near to slightly earlier than normal end of the 2017 growing season. What this would mean for US crop production is extremely uncertain. Nonetheless, we feel that concern for immature crops will quickly grow following the US Labor Day holiday.
- Big volumes are trading in wheat as end users absorb a portion of the fund selling. How wheat closes will be important for its longer term trend. IA total rainfall from May 1 to Aug 16 is well below the 2012 drought year. Crop stress is worsening. Research argues against a bearish stance as seasonal and potential annual lows are being formed in wheat and soybeans.