- Chicago chops; US Dollar falls to new 7-month low; Spot Indian milling wheat trades at $8.90/bu.
- Dull and choppy best describes Chicago at midday. Pro Farmer’s tour on day 2 is finding excellent potential in parts of eastern NE, but mixed results in OH and SD and as the trade has already digested large US crops new input is being sought. We note the US dollar is down another 0.3% at new 7-month low. Currency relationships are changing at a time when ag market seasonal trends turn less bearish and turn positive in corn and wheat in early Sep, and work suggests bearish leverage will be in retreat.
- US exporters sold another 371,000 mt of new crop soybeans to China and Mexico, bringing this week’s total a known basis to 814,000 mt. We reiterate that while Chinese purchases of US soy are considerably below normal, China is fully expected to secure 20-22 million mt of US origin between now and January. The glass half of full analysis is that a majority of these beans must still be priced.
- Spot Paris milling wheat is up €1.75/mt despite strength in the €uro. Ukrainian corn for Sep delivery is quoted $1.50-1.60 over Sep Chicago, and there is still nothing available from Ukraine October onward. Harvest there should begin in the next few weeks, and actual yield data is critical. USDA predicts Ukrainian corn yield to drop 15% below trend, but the complete absence of rainfall in central and eastern areas in July and the spread of dryness in August likely boosts corn yield loss there to 20-22%. For now, the Ukrainian cash corn market is in rationing mode.
- Brazil’s interior corn price index is quoted above year-ago levels for the first time since June. Lows in interior and fob premiums are typically scored in June. Strength in the Brazilian market continues to suggest some kind of supply disruption, whether due to crop size or logistics.
- Indian wheat prices have rallied another $3/mt this week, with spot milling market quoted at $8.90/bu. The rally in Indian wheat prices is unlikely to end until January or until modest imports are secured. Indian food inflation remains intact.
- Macro market influence leans negative. Equity markets are slightly weaker in corrective fashion, while spot WTI crude is down $0.40/barrel at $73.95.
- The Midday Central US GFS weather forecast has shifted the chance of spotty showers next week from NE/SD to MO but the overall pattern is consistent. High pressure riding aloft expands over the next 48 hours and covers much of the Central US Sat-Thurs. Precipitation will be forced into Canada and the Southeast, while high temperatures in the 90s briefly impact the southern Midwest. The GFS forecast allows this ridge to relax after Aug 30. Mild but dry conditions are forecast in the 11-15-day period.
- Bearish sentiment/chart patterns continue as the US pipeline is soon to be filled, with old crop cash pricing still a feature in corn and beans. Be prepared for a more two-sided market moving forward.