- There have only been a few times since 1975 when spot HRW KC wheat futures have traded below Chicago corn. The last time was in 2012 amid the dire Central US drought. It is possible that spot corn could trade below KC wheat, but US wheat futures have rally substantially or US livestock feeders will increasingly feed wheat – not corn in the July-October period. The world is awash in wheat and raising corn prices will be a significant boost in US feeding and world feed wheat trade. Wheat makes rationing corn use easier.
- Chicago soybeans gapped higher on the Sunday open and extended gains into the close on Monday. July and November soybeans were each above their respective 200-day moving averages at the close, the first time for July soybeans since February. After the close, NASS reported that 77% of the US soybean crop had been planted through Sunday, up 17% on a national basis. The states of IL, IN, MN, MO, OH, and SD were all more than 20% behind the 5-year averages, with OH 48% behind the 5-year average at just 46% complete. IL is 25% behind its 5-year average and IN was 30% behind. Moreover, just 55% of the national crop is emerged versus the 5-year average of 84%. NASS reported that initial soybean crop conditions would be reported next week. Near term, the soy market is finding support from fund short covering. Our belief is that US farmers will get all of their intended soybean acres planted by early July.
- July corn ended up 2 cents with forward futures gaining 3-5 cents. Debate over acreage/yield potential rages on, but west of the MS river conditions have improved. Recall that funds have established a sizeable net corn long position estimated at 220,000 contacts. Corn planting as of Sunday reached 92% complete. States lagging most include SD, OH, MI and IN. IL is 88% planted. OH is just 68% planted with prevent plant here expected to reach 1 million acres. Assuming NASS’ intentions number, there are 7.4 million acres of corn left unplanted. This roughly matches our expectation for national corn acres enrolled in the Prevent Plant program. Crop ratings were unchanged at 59% good/excellent. Modest improvement lies ahead into early July amid coming warmth and increased days of sunshine. Research maintains that slowing demand will be accomplished at current prices. There is talk that Brazil’s final crop size this year will reach 103-104 million mt vs. USDA’s 101. The Safrinha harvest in Brazil is just 10% complete. Until the market is past the June Stocks/Seeding report, corn prices we believe will trade in a wide range of $4.10-4.70 basis July futures.
- Chicago wheat futures ended a cent higher; KC ended a cent lower. Widespread soaking rain will further delay winter wheat harvest, which is already behind schedule due to slow maturation. However, a pattern shift next week will funnel fresh rain into the Canadian Prairies and warmer/drier weather into the Plains. Wheat fundamentals remain bearish relative to current price levels. The 2019 US winter wheat harvest progress through Sunday reached 8%. This compares to 25% a year ago and 20% on average. KS’s harvest is just 1% completed as the crop slowly matures without heat/dryness. We would note that the Plains will be drier beyond the next 48 hours. An acceleration in harvest lies ahead. And early HRW yields are impressive at 75-90 bushels/acre in TX and OK. Spring wheat crop ratings fell slightly to 78% good/excellent, vs. 81% last week and 71% on average. Spring wheat weather is favourable into late June. SRW’s premium to EU origin has widened to $32/mt ($0.87/bu). Russian cash fob prices are unchanged. Wheat appears to lack a demand driver and as such is overvalued. Northern Hemisphere harvest pressure is due in the next two weeks.