- Chicago futures are lower at midday on less threatening Central US weather and profit taking following several days of fund short covering gains. Other than short funds, end users nor exporters are willing to chase the Chicago rally with crops growing and improving in the fields. We look for Monday’s NASS Crop Condition and Progress report to reflect steady to a 2% improvement in good/excellent corn and soybean ratings. As of today, summer row crop yield potential is high with above trend line corn/soybean yields forecast.
- FAS/USDA confirmed that China booked 126,000 mt of US 2020/21 soybeans and 202,000 mt of corn. The sales were said to have been made late last week and announced today. It was hoped that China would be buying 1.5-1.7 million mt of US soybeans per week. Markets are disappointed by China’s purchases of US crops to date. However, there remains time for China to pick up the pace heading into the end of the year to reach Phase One targets.
- Russian, European and Ukraine Black Sea ports are witnessing a sharp reduction in vessels arriving/loading in July. The trend could be related to Covid-19 demand destruction or that French/Russian and Ukraine farmers are being tight fisted with their new crop harvest. We will follow the vessel loadings, but a just a year ago, Russia exported 8 million mt of wheat in July/August which is unlikely to be achieved this season. There is no doubt that there is a drag in world wheat and corn demand during July amid the Covid-19 and economic uncertainty.
- The midday GFS weather forecast is wetter with convective storm activity on almost a daily basis after the long holiday weekend. A rich source of gulf moisture along with afternoon heating will produce showers/storms. None of the rains are projected to be heavy, but over the next 10 days could add up to 0.3-1.25″ helping to maintain high corn/soybean condition ratings.
- Also, the mean position of the ridge has shifted west, a trend that we think will be furthered in coming model runs. The best rain chances will be across the N Plains and the W/N Midwest, with reduced totals in the E Midwest.
- High temperatures will range from the mid 80′s to the mid 90′s from Sunday into Thursday before retreating by 4-7 degrees. A decline in temperatures will allow rain chances to increase. The 11-15 day forecast starts with a Plains ridge, but ends with its compression southward and cooler temperatures/increasing rain chances.
- An acute focus on Central US weather will direct Chicago prices in coming weeks. Today’s midday forecast is more hopeful for Midwest rainfall next week. This is not a set up for a lasting period of extreme Midwest heat/dryness. More likely is warmer than normal temperatures and at least near normal rain that would allow crops to hold their high yield potential into the autumn. Our expectations for 2020 US corn and soybean yields are near to above trendline.