- HEADLINES: Chicago wheat/corn fall on profit taking and selling the fact; GFS 10-15 day forecast blazing hot/dry; NASS condition ratings to rise 1-3% in good/excellent.
- Chicago grain futures are mixed at midday. Trade this morning has been a; “Tale of two markets”. Chicago grain futures were sharply higher overnight on the Russian’s ending of the Black Sea Grain Initiative. The news sent futures higher on algo buying related to the headline. The rally persisted into the morning reopening pushing double digit gains.
- However, the Chicago rally quickly uncovered profit taking since the market had already feared the corridor closing, and that Ukraine’s smaller 2023 corn/wheat harvest will be able to flow through Eastern Europe and down that Danube River to facilitate monthly exports of 2.5-3.0 million mt. Such a monthly export average would be enough to ship Ukraine’s sharply diminished 2023 harvest. The weaker corn/wheat markets then applied modest selling pressure to soy which dropped November soybean futures back to unchanged.
- The ending of the Ukraine Grain export corridor had been widely discussed since early May. Russian President Putin made it clear that Russia felt that NATO sanctions needed to be curtailed to allow unfettered export of grain and fertiliser. Russia will continue to export record tonnages of wheat estimated at 45-46 million mt in 2023/24. The Ukraine wheat exports of 10-10.5 million mt are important, but the grain will find its way out of Ukraine at a cheaper price. The impact is the cost of logistics and a lower price back to the Ukraine farmer.
- Chicago brokers estimate that managed money has sold 4,500 contracts of wheat, 6,200 contracts of corn, and 1,200 contracts of soybeans since the reopening. In soy products, funds sold 2,500 contracts of soyoil and bought 2,000 contracts of soymeal. Funds were buyers overnight and large sellers this morning.
- US export inspections for the week ending July 13 were 14.3 million bu of corn, 5.7 million bu of soybeans, and 9.3 million bu of wheat. All were below the weekly averages needed to reach annual WASDE targets and deemed disappointing. The US has sold 1,333 million bu of corn (down 648 million or 33%), 1,833 million bu of soybeans (down 102 million or 5%), and 65 million bu of wheat (down 12 million or 15%). US exports continue to disappoint.
- NOPA reported a June Crush of 165.0 million bu of soybeans, down 7% from May, the lowest monthly crush since September 2022. The industry expected a June crush of 170.6 million bu with soyoil stocks falling to 1,690 million pounds, down 130 million pounds from trade expectations. The 5 million bu decline in crush would have produced 56 million pounds of less supply, which argues that June domestic soyoil demand was record large and that the US is on the cusp of where monthly crush cannot keep up with biofuel demand for soyoil. US monthly crush rates are modest in July/August, and a further tightening in US soyoil stocks is forecast which will maintain or rally cash soyoil prices. The demand led market in US soyoil is underway with Canadian canola production under pressure due to a worsening drought across the Prairies.
- The midday GFS weather forecast is drier and warmer than the overnight run. The midday GFS forecast brings back extreme heat in the 11–15-day period as the high pressure ridge in the Intermountain West amplifies and progresses eastward. The Plains and the SW Midwest would be exceptionally hot with high temperatures ranging from the 90’s to the lower 100’s. Such heat would be devasting for crops that have not seen more than 1.00” of rain in the past 10 days. This is a below normal rainfall and above normal temperature pattern with close attention to be paid to the heat that is projected after July 23. Until then, showers will be widely scattered this week with rain totals ranging from 0.2-0.8” and coverage being no better than 40% of the crop area. Close attention is again warranted as the last half of corn pollination and soybean pod filling is ahead.
- Soil moisture across the Central US is short to very short, even amid recent the recent rain, and only half of the US corn crop has pollinated with soybean pod fill to occur in August. US corn/soy crop conditions are expected to be up 1-3% in the good/excellent category later today with spring wheat ratings being steady. Canada is securing US corn for import due to drought. This is no place to be short corn!