• Wheat rallies strongly on European gains; GFS midday weather forecast adds rain to NC Midwest; US 2023/24 soymeal sale to unknown destination.

• Chicago grain futures are mixed with a strong rally in world wheat values leading the morning advance. Wheat crop quality issues across Western European along with a rumour that there was a nuclear leak at Russian Rostov facility spurred the strong morning Chicago rally. Corn and soybean futures followed. Newsweek and UK tabloids sponsored the Rostov nuclear leak rumour. The Russian’s have denied the leak and Chicago grain prices have relaxed.

• The opening volume of Chicago trade was active while the midday action has turned slow. Overnight internet/software upgrade issues are being resolved, but European and SE Asian traders are taking off for the weekend. We look for a choppy/mixed trade into the close. The volatility of world financial markets is increasing on speculation on whether President Biden will be ending his Presidential campaign. Traders are taking profits on the “Trump” trade following the successful Republican Milwaukee Convention.

• Chicago brokers estimate that funds have bought 6,500 contracts of wheat, a net 900 contracts of corn, and 1,200 contracts of soybeans. In the products, funds have sold 2,600 contracts of soymeal and 1,700 contracts of soyoil. The large net short structure of Chicago will be under examination later today.

• The USDA reported a 105,000 mt soymeal sale to an unknown destination. The sale was for the 2023/24 crop year. This was the second soymeal sale in recent days. There are cash connected rumours that China is securing US Gulf soybeans for Oct/November now that US soybeans are priced below Brazil through yearend.

• September Paris wheat futures closed with strong gains of €8.75/mt ($0.25/bu) due to growing crop quality concerns. The French/German wheat harvests are showing light test weights with evidence of sprout damage. Protein levels are low, and traders are worried that the new French wheat crop may not reach the deliverable 11% protein that is required by Paris futures.  Notice in the daily wheat chart of Sept Paris wheat that futures closed well above the gap left in early July, with the next upside price target being €235. We note that Europe requires at least 9 million mt of French wheat for its own domestic flour production, which could significantly short the export market. The French cash wheat market must increase its premium to Russian fob wheat to assure its own domestic supply. Russian fob wheat values closed the week at $218, steady with Monday. Russia no longer needs to be as aggressive in pricing its wheat to gain world demand.

• We caution that just 17-19% of the French and 12-14% of the German wheat harvest is completed, so making blanket assumptions on quality is risky. However, the next few weeks of harvest will determine whether the early harvest light test weights are a forecaster for the remainder of the crop.

• The  US GFS weather forecast is slightly wetter across the NC Midwest and slightly drier across the Gulf Coast and SE US. The N Plains and the Canadian Prairies hold in a warm to hot weather pattern with limited rainfall. Flooding will become an issue across the Gulf States with the corn harvest there set to begin in 2-3 weeks. No extreme heat is forecast with Midwest high temperatures to hold in the 70’s to the upper 80’s. The extended GFS 10-15 day forecast places a strong ridge of high pressure across the South-Central US with extreme heat returning.

• A base is being built in Chicago for a rally during late July/August. The milling quality loss of the French/German crop is highly important for future world wheat trade. We look for Russian wheat prices to start an advance on importer reach for protein supplies. Corn and soy futures struggle on rallies on yield ideas. Any surprise in Central US weather is tipped away from future improvement. Long range forecasts are hinting at the return of NW and Southern US heat.

To download our weekly update as a PDF file please click on the link below: