- HEADLINES: Chicago weakens on US dollar strength, negative macro input; Egypt buys Romanian wheat.
- Chicago ag markets are weaker at midday. It is not Pro Farmer’s findings, but rather macro market weight, with the US dollar index finding a newer 11-week high, which pulls money from global raw material markets. The US$ is perched against initial chart-based resistance and key is whether support can be found above 104 points. Spot WTI crude is steady/weaker. The Dow is down 125 points. Weakness in the Brazilian Real and Russian Ruble is also noted. Wheat’s most recent break has been centered on the return of exporter profitability there as fob quotes rise and currency weakness weighs on replacement costs across S Russia’s export corridor.
- Egypt’s GASC this morning purchased just one cargo of Romanian wheat at fob price of $256/mt.
- Russian wheat was offered in bulk but at the long-discussed new floor price (for public tenders) of $270/mt. Russian origin despite large supplies is no longer the cheapest. We also note that two cargoes of Ukrainian wheat were offered, and broadly competition for near-term wheat import demand remains sizeable. Egypt has covered supply needs through mid-October. Additional Egyptian/major importer tenders are anticipated on breaks.
- US exporters sold 112,000 mt of US corn for 2024/25 delivery and 112,000 for 2025/26. Why Mexico is inching into coverage two years out is uncertain.
- There is an otherwise lack of breaking news, and it is all about supply into the beginning of the Northern Hemisphere harvest. The return of meaningful rainfall and lasting mild temperatures in the Central US is unlikely prior to mid/late September, barring tropical storm/hurricane activity. Updated 16-30 day guidance keeps in place a pattern of abnormal heat/dryness. Extreme heat will stay centered on the Central Plains.
- There is still no hint that needed rain arrives in Central Argentina in the next two weeks. FAS’s updated subsoil moisture maps this morning feature zero water in Cordoba and La Pampa, and minimal water in northern Buenos Aires and Santa Fe. Argentine wheat crop ratings are projected to drop another 1-2 points on Thursday to just 18-19% good/excellent. It is early in the season but ratings now are no better than last year. Recall Argentine wheat yield in 2022 was 30% below trend.
- Southern Hemisphere weather takes on more importance beyond the next 10 days. ABARES will publish its next 2023 Aussie grain production estimates on Sep 5.
- The midday GFS weather forecast is consistent with the morning run in calling for only briefly cooler temperatures this weekend/early next week and an ongoing lack of precipitation into the first full week of September. Amplified high pressure ridging currently aloft the Plains/W Midwest will be forced south and west Sun-Tues. Ridging expands thereafter, and while extreme heat ends on Friday, high readings in the 6-15 day period will be routinely in the mid/upper 80s Central US-wide. Evaporation rates stay elevated. There is a chance of light/scattered showers across the Great Lakes Region Mon-Tues, but arid conditions persist elsewhere.
- Volume remains tepid. Open interest remains deflated. The looming N Hemisphere harvest keeps new buying limited/absent seasonally into late month, but amid record large global soy and wheat trade and recovering corn demand, recoveries lie ahead. The US soy balance sheet becomes unsolveable if yield is trimmed another 0.5-1.0 bushels/acre. The ongoing rise in Brazilian fob corn premiums suggests importers are capitalising on the recent correction in value. Sales are not advised here.