- HEADLINES: Chicago rallies sharply following day one Pro Farmer estimates; Macro markets lend support; US forecast largely favourable.
- Chicago futures have extended overnight strength slightly as new buying occurred just after the normal opening as the market digests disappointing day one results from Pro Farmer’s tour of the far western and eastern Corn Belt. Tour participants have begun to travel further into the principal Midwest and all eyes will be on the extent of improving potential in IA, IL and IN. Some work even updated crop ratings on Monday continue to indicate a final corn yield of 173-176 and final soy yield of 50.5-52.0, but where actual yields fall within these ranges is highly important given the lack of US and global carryover supplies. Pro Farmer’s yield estimates later this week will be the most important in years.
- Energy markets have also expanded upon overnight strength, with crude up $3.00/barrel at midday.
- US exporters sold two cargoes of soybeans to China, as Chinese interest continue to exist just below the marketplace. China’s hand-to-mouth approach to autumn soy supply coverage has kept excitement at bay, but China’s need to price sizeable tonnage of US origin for Oct-Jan delivery will buoy Nov beans above $13.50-13.70 through harvest.
- Egypt announced it had secured 200,000 mt of Russian origin wheat via direct purchases, rather than tendering for supply. Price details are unavailable, but that Egypt has confidence in the Russian market is important and provides one small piece of the puzzle regarding future Black Sea grain flows. Yet, importers are also still willing to pay large premiums for European origin due to reliability. Very close attention will be paid to military action in Ukraine ahead of Wednesday’s Ukrainian Independence Day, and as the US government urges citizens to leave the country.
- Heavy rainfall since mid-August across much of Southern Brazil will allow soy and first-crop corn seeding to begin there in a timely fashion. Very isolated but needed rainfall 1.5-1.9” has also been recorded in the last 10 days across central Mato Grosso, and we hear that producers will be active in planting the new soy crop once allowed on Sep 15. The timing of soybean seeding in Brazil is critical this year as record production is needed to boost global soy stocks and as annual US soybean exports will be fine-tuned Dec onward based on yield potential there. Brazilian soy acreage expansion remains probable given firm prices.
- The midday GFS weather forecast is drier MN, northern IA and northern IL compared to the morning solution, but it remains that active shower activity returns to the far eastern Plains and Central Midwest Sat-Mon. Accumulation of 1”+ will favour southern IA, MO, and far western IL. Additional rain chances are offered to OK, KS and MO throughout the first half of next week. It is a non-threatening forecast, with still no indication that polar air drops southward into Canada and US Northern Plains prior to Sep 8. The primary question is soybean’s response to late-season rainfall, with pod counts somewhat elevated in IA, IL and large portions of IN. Max temperatures over the next 10 days will exist in the 80s and low 90s across the Plains/W Midwest and in the low/mid-80s across the east.
- Chicago values are adding weather premium as the US yield debate is renewed. Chart patterns look more positive with wheat have recaptures last week’s Black Sea headline-based losses. We would advise against adding to speculative length at current prices ahead of harvest, with new buying advised only on corrections lower.