- Forgive the pun, Chicago appears to be caught in the mud, with neither rallies or breaks being able to follow through. Such was the case again this morning with lower overnight values unable to be sustained with new speculative buying showing up on the Chicago reopen.
- Nearby wet weather and long lead forecasts calling for continued cool/wet Midwest weather through summer prompted the early buying. Normally, 30 and 90 day forecasts don’t draw much trade attention based on their inaccuracies, but since everyone is worried about getting corn and soybeans to progress in their development stages, the prospect of continued cool/wet weather was alarming to the bears. Weather is the key Chicago focus as the growing season gets underway. July this year will be like June (in normal years) via seeding dates that are 20-30 days behind normal. What Midwest crops desire going forward is warmer than normal temperatures and soft regular rains that are least normal. That is the recipe for a recovery in weekly crop conditions and yield prospects. And by the way, lots of sunshine through September would be additional big help in yields.
- Chicago brokers estimate that funds have bought 11,000 contracts of corn, 8,000 contracts of soybeans and 4,200 contracts of wheat since the reopen. In soy products, funds have bought 4,000 contracts of meal and 2,100 contracts of soyoil. Funds are covering the remainder of their net short soybean position.
- The US weekly export sales report showed that for the week ending June 13 the US sold; 6.9 million bu of wheat, 1.5 million bu of old crop corn and 14.2 million bu of new crop, and 21.0 million bu of old crop soybeans and 7.3 million bu of new crop. The US made no new sales of US pork to China last week. If China has a big need for imported meat, they are not buying in the US market.
- For their respective crop years to date, the US has sold 233 million bu of wheat (up 50 million or 27%), 1,907 million bu of corn (down 313 million or 1.4%) and 1,746 million bu of soybeans (down 325 million or 16%). China shipped out 9.25 million bu of soybeans on the week with known open sales on the books of 6.0 million mt or 163 million bu. Research argues for a 100-125 million bu reduction in 2018/19 US corn and a 25-35 million bu drop in soybean exports. The slower exports will flow directly to stocks with US 2018/19 corn stocks pegged at a 2,300 million bu.
- There are private reports that Russia and France have recently sold wheat into Mexico. The sales are not a surprise with CIF offers from both countries well below US rail offers. Yet the sales of non-US wheat into Mexico reflect how overpriced US wheat is since the US has a huge freight cost advantage. One could import Russian wheat into the US for a profit, if it were permitted.
- Traders are debating 2019/20 US wheat feeding amid the US corn shortfall. A record amount of US wheat was fed in 1983/84 at 411 million bu. And as recently as 2012, the US fed 388 million bu of wheat. In the flood year of 1993, the US fed 278 million bu of wheat. The US will likely feed some 250-350 million bu of wheat in 2019/20 compared to the June WASDE forecast of 140 million bu offered last week.
- The midday GFS weather forecast is drier for IL/IN and OH that what was offered overnight. The midday model subtracted some 0.5-2.00″ of water from the E Midwest in the coming week. The heaviest rain now looks to fall across MN/IA and far W and SIL with totals of 1.50-3.00″ through Wednesday. A ridge of high pressure then builds from the SW US into the N Plains which will fan sunshine and warming temperatures. Afternoon thunderstorms are likely, but heavy rains will be diminished.
- Chicago is caught in a trading range demanding data to decide if additional domestic rationing is needed. The world is awash in grain, and US export demand rationing is already occurring. It is sunshine that crops demand during July.