- Fund selling amid the deepening US/China trade conflict and worry about the spread of African Swine Fever (ASF) across China has pressured Chicago corn, soy and wheat futures. The volume of Chicago trade has been active with more than 170,000 contracts of December corn, more than 65,000 contracts of November soybeans, and more than 60,000 contracts of December Chicago wheat changing hands. Chicago is becoming oversold and there could be a late day rally. US/China trade negotiations are ongoing, and progress is being completed. It is highly unlikely that this negotiating team will produce a deal. However, these low level trade teams is where the real work is accomplished for the “higher ups” later on. It is a step forward that the US/China are talking. We would caution about becoming bearish of corn or wheat with US export demand to expand amid tightening world supplies.
- Chicago brokers estimate that funds have sold 3,400 contracts of soybeans, 5,200 contracts of corn, and 2,000 contracts of wheat. In soy products, funds have sold 2,300 contracts of soymeal while being flat in soyoil.
- China announced its fourth case of African Swine Fever (AFS) overnight at a location that was 1,300 miles from the initial incident. The broadening area that the disease has been found has some wondering the percentage of the Chinese pig herd could be impacted. AFS is a nasty disease (some call it the ebola of pigs) that often produces death in some 2-10 days. There is no vaccine or antidote available. Traders are trying to assess how many Chinese pigs could be impacted into yearend. Some argue that if the Government does not immediately limit transit and take drastic measures, that it could impact 5- 20% of the Chinese pig herd, or as much as 25-105 million head.
- The central US GFS weather forecast is like the overnight run with a series of storms expected to impact MN/WI/IA/IL and MI. Rain totals with a Friday/weekend system look to range from 0.25-1.50” with like totals due mid next week. Drier and above normal temperatures follow thereafter as a high-pressure ridge builds northward across the Plains. Above normal temperatures will persist with highs ranging from the 80’s to the lower 90’s. Any real heat will be located over the SC Midwest and the S Plains. US crop maturity will be pushed amid the above normal warmth. There is no evidence of any cold air for the NC US that would pose a threat to crops.
- The week has featured a weaker Chicago as the market’s focus was shifted back to large US crops via the Pro Farmer Tour. New US/China tariffs have not helped the bulls However, world crop production outside the US continues to decline which will offer a big US export opportunity. Chicago corn/wheat has become technically oversold with a Friday bounce expected. Research call for a secondary seasonal low before early September. World wheat prices are not declining all that much. Downside price targets for Dec corn rest at $3.60.