- HEADLINES: Low volume Chicago trade at midday as traders debate Central US weather; Soyoil drop based on sharp canola losses.
- The bears/bulls have been battling with corn, soybeans, and wheat trading on either side of unchanged. Minneapolis wheat is lower on spread unwinding while canola falls to sharp losses on the rain that fell across S Saskatchewan and Manitoba. The biggest Chicago volume was on the early break as Dec corn failed to fill its open chart gap at $3.735, while November soybeans failed to take out their overnight highs. That failure turned the momentum down with fund selling following. Exceeding either technical point will determine the next corn/soy move. Traders are unwilling to sell Chicago with threatening weather across the Central US next week. A bearish weekly export sales report will provide a chance to position for a hot/dry Central US weekend. A higher Chicago close is expected with the midday GFS weather forecast showing consistency from the hot/dry overnight run.
- Chicago brokers estimate that funds have bought 2,600 contracts of soymeal and 2,200 contracts of Chicago wheat while selling 2,100 contracts of corn, 1,500 contracts of soybeans and 5,400 contracts of soyoil. The biggest selling this morning has been in soyoil with the cash market said to be unbending. The delay in US biofuel mandates from the Biden Admin will not impact demand.
- China purchased 4-6 cargoes of Argentine soybeans yesterday and is showing improved interest for US soybeans off the PNW for late September/October this morning. The changing cost (almost daily) of grain transit via 77-year lows of the Parana River makes it difficult to calculate the delivered cost of Argentine soybeans to China. However, the point is that China has cleaned out Brazil and is now turning to cheaper Argentine offers before US interest is expected to emerge in coming weeks. A year ago, China started its massive US soybean buying program in late July.
- Chinese sources also claim widespread crop and infrastructure losses due to flooding rains that fell within a matter of hours across Henan. Livestock and crops were adversely impacted while drought across northern crop areas is also gaining in importance. With the typhoon season starting, the worry for Chinese crop production is starting and it is something that Asian sources report to be worth following.
- US weekly sales are estimated at 140-200,000 mt of old crop corn and 350-500,000 mt of new crop, 50-100,000 mt of old crop soybeans and 200-350,000 mt of new crop, with wheat at 300-420,000 mt. Soyoil sales are -10,000 mt to +5,000 mt with soymeal at 80-140,000 mt in the new crop position. The sales report is expected to follow prior week totals and be non-inspiring. Brazilian corn wash outs are not yet being transferred to the US with their being no new daily sales announcements.
- The primary weather models are going to have great difficulty in calling the location or rainfall totals of ridge riding short waves. There will be several chances of light shower chances in the next 2 weeks for the Lake States, but rain location/amounts are impossible to call. The midday GFS weather forecast is drier through the N Plains and Wisconsin, while being wetter across Minnesota and E Iowa. The models are struggling with the position of the high-pressure ridge after August 1. The GFS weather model sees the rain as being cantered on Wisconsin/Michigan/Northern Illinois and Indiana. Otherwise, the Plains and the remainder of the W Midwest are dry.
- High temperatures will be in the 90′s to lower 100’s across most of the Plains and W Midwest starting Friday and continuing next week. This is a hot Plains forecast.
- The midday GFS weather forecast is arid, but cooler for the Plains/W Midwest in the 10–14-day period. The GFS/EU models differ on the amplitude of a high-pressure ridge in the extended 10–14-day range. The GFS forecast is further south and less amplified with the ridge, while the EU model has the Central US baking under a strong ridge. The EU model has the strong track record of late. We look for the heat/dryness to extend into August.