- HEADLINES: Chicago mixed as corn sags on fund selling; Rumours that China secured US corn cannot be confirmed by cash traders; Stats Canada out Aug 30.
- Chicago futures are mixed at midday following a liquidating break in December corn futures below $5.30. Soybean/wheat futures followed corn to easier levels, but never reached into the red. Soyoil is posting strong gains on the expectation that the Biden Administration won’t break its promise to US farmers on steady to expanding biofuel use made during the 2020 campaign. Traders are expecting steady to a 1% increase in US good/excellent corn/soybean ratings this afternoon. We are leaning to a firmer close, but it is a day where both the bulls and the bears do not want to be very vocal in their market stance.
- Chicago brokers estimate that funds have bought 1,900 contracts of wheat, while being flat in soybeans and selling 7,500 contracts of corn. In the products, the funds have sold 4,400 contacts of soymeal and bought 6,400 contracts of soyoil. Active oil/meal spreading is noted this morning.
- There is cash talk that China was bidding and may have bought US corn as December fell under $5.30. We cannot confirm the cash rumours but hear that China has a bid under corn on fresh weakness. If China did secure US corn under $5.30 December, the tonnage involved is likely less than 250,000 mt.
- There is also talk that China booked 4-6 cargoes of US soybeans with at least 3 cargoes sold off the PNW for October. We note that in checking with Chinese importers that there does not appear to be any problem offloading soybean vessels in China, while there are some Covid related snags in barley and sorghum. China’s 0% tolerance on Covid means that the entire crew must be tested and cleared for a vessel to offload.
- Stats Canada will release their August crop report a week from today. The report will be extremely important for canola/world wheat futures. Early harvest data has been disappointing in terms of yield results with private estimates discussing a Canadian 2021 all wheat crop of 21 million mt or less and a canola crop of 12.5 million mt or less. Both are well below the USDA estimate of August 12. Cash durum prices continue to push higher on tightening supplies.
- Russia started releasing harvest data after hiatus since August 11. Russia has now harvested 62.2 million mt of wheat with an average yield as of August 24 of 3.13 mt/Ha (46.4 bushels/acre), down 12.6% from last year. The harvest data points to a 2021 Russian wheat crop of 73-75 million mt, which is just above the USDA August estimate. Russian export tax rates calculated on a 60-day average price are expected to start a steady march higher in the weeks ahead. Russian farmers are showing no interest in cash related sales due to the tax/cash bids.
- The US exported 28.5 million bu of corn, 24.2 million bu of wheat and 7.9 million bu of soybeans in the week ending Aug 19. China shipped out 2.45 million bu of beans. China has 1.6 million mt of old crop corn left to ship out with an estimated 600,000-900,000 mt of those purchases likely to be rolled forward to new crop. We estimate that China will take 28.5-29.5 million mt of world corn in the 2020/21 crop year that ends on September 30t, a record by a wide margin. China was the US’s biggest wheat shipper last week taking nearly 170,000 mt.
- The midday GFS weather forecast is wetter across lowa/E Midwest, while being drier across Minnesota/Wisconsin and Michigan. The forecast models are struggling with the exact position of a system this weekend and the storm’s convective outlay of rainfall. A few light showers are falling across NW Illinois today, but totals are less than 0.25″. Warm/humid weather will prevail this week with highs in the mid 80′s to the lower 90′s. Crop maturity will be pushed with corn harvest starting across the Central Midwest in mid-September. The Central and Southern Plains hold in an arid trend.
- Funds are liquidating corn market length while world wheat/oilseed values are pushing upwards. This is the wrong time of the year to be making cash sales with US corn export demand starting to show. Mexico purchased 458,600 mt of US corn. Brazilian corn exports are far below last year, and the US will benefit. A seasonal low is forecast to be forged in corn/soy by early September.