- Soy futures were back and forth at the start of the week in a 15-16 cent range. Fund selling pressure was diminished as funds are now estimated to be out of their net long soybean position (likely holding a modest net short). Funds are long soymeal, which paced Monday’s decline and finished more than $3/ton lower. After the close, NASS reported soybean good/excellent crop ratings were down 1% from last week at 73%, matching the previous records set in 2016 and 2014. good/excellent fell 6% each in IL and LA, 5% in NE, and 4% each in MO, NC, and OH. The best rated crop remains in WI at 87%, and the lowest rated crop is in MO with just 44% rated as either good or excellent. 19% of the crop in MO was rated as poor/very poor. The uncertainty of US/China trade negotiations makes the price outlook impossible. A resolution sends Chicago markets sharply higher, while a prolonged trade dispute likely drags prices lower. We remain hopeful that both sides can work to a resolution in the weeks ahead. Chinese buyers will not seek US soybeans until non US supplies are nearly exhausted.
- US/Chinese trade tensions has dropped the soybean market $1.50/bwhich could add to US corn seeding in 2019. This has pressured corn values. US corn crop condition ratings were up on the week. Moisture will be restored in much of the C Plains and S Midwest over the next 4-5 days. Weather input over the next 10 days leans negative. Good/excellent crop ratings as of Sunday were pegged at 78%, vs. 77% the prior week. Significant declines were recorded in TX and MO (heat/dryness), but elsewhere conditions remain historically high. Yield ideas of 180+ remain intact. We view the near US weather pattern as favourable, but do caution against expecting a lasting trend. The models are in general agreement that high pressure ridging returns in July. Managed funds since last Tuesday have sold a net 65,000 contracts. Funds’ net position is now short an estimated 30,000 contracts. Clearing stale longs has been a chore, but moving forward liquidity won’t be in favour of the bears. Trade uncertainty is priority number one. Fundamentals remain bullish otherwise. Ukraine/S Russia will be dry into July.
- US wheat futures crashed again, with Sep Chicago down another 12 cents while July KC wheat closed down 20 cents. Spring wheat crop ratings were up sharply. Trade uncertainty persists, and world markets have been forced to follow the US lower. US winter wheat harvest has reached 27% complete, vs. 24% on average and 26% on this week a year ago. Harvest will reach 50% in the next two weeks. Importantly, interior HRW basis continues to strengthen in spite of harvest and collapsing future values. HRW basis in KC Monday evening is pegged at $.20/bu over futures, vs. $.35 under futures in June of 2017. The US cash market is urgent with respect to securing recently harvested grain. No deliveries are expected against July KC. Spring wheat ratings were pegged at 78% good/excellent, vs. 70% last week, and 41% a year ago. The far N Plains will avoid excessive heat over the next 10 days. However, the Black Sea will remain arid and increasingly hot. Black Sea futures are down slightly today, and suggest Russian fair value lies at $216/mt in Dec, vs. spot cash offers of $200. We acknowledge that US trade concern will dominate Chicago price discovery. Sales are not advised. Funds are short in Chicago and the EU/Black Sea wheat crops are in decline.