- Mixed at midday is Chicago trade with wheat and old crop soybean futures being slightly higher while corn prices sag on record large US production potential. The 1% gain in good/excellent corn conditions to 72% with future condition gains forecast into mid-July has corn prices under pressure. The 2020 US corn crop has record yield potential with normal Midwest weather for the next 3-4 weeks.
- Soybeans and wheat are firmer on fund short covering and news that China secured 2 cargoes of US soybeans. We hear that those beans were sold last week and that the seller wanted to pull them forward amid the ongoing US/China political brouhaha. The rally in soy and wheat appears to be largely technical in nature with the July/November soybean spread inverting to uncover US farm sales. Cash soybean basis levels are firm nearby with crushers pushing to add forward coverage. November and back end US soybean futures are weaker on the coming abundance of supply and potential for NASS to find 1-3.0 million acres of additional US soybean acres in next week’s Seeding Report. We look for a mixed close with December corn futures closing below key support at $3.39.
- Late last week there was cash connected talk that China was asking for prices on US ethanol and corn. In fact, many argued that China could be releasing 5.0 million mt of TRQ’s for new world corn imports. Today, those cash rumours are gone. We hear that no US ethanol sold to China, and Asian sources suggest there is no immediate plans for China to issue a new round of corn TRQ import licenses. Remember, that for a private buyer to take US corn requires a GMO import license. China demand for grain and ethanol appears to have evaporated.
- We hear that China is still asking for meat/soy/grain certification from exporters that US ag shipments are tested and Covid-19 free. The science on Covid-19 says such certification requests (by China) are without merit. But China claims that following a European salmon incident last week, there is a means of transmission. The debate is ongoing, and the hope is that science will make China agree. However, the longer this goes on the more China will argue their case. The US ag industry hopes that this gets resolved quickly.
- Because of the recent increase in US Gulf corn prices, Brussels has dropped the import levy to $4.60 €uros/mt from $10.40 €uros. The levy is reviewed month-to-month based on the US Gulf and world corn price structure. As world corn prices decline, the levy will rise to prevent more sizeable feedgrain imports and protect EU feedwheat and maize producers.
- The US$ was under pressure with the €uro rising to $1.138 while the Brazilian Real traded up to 5.16:1. The Argentine Peso fell to 70.04-a record low.
- A progressive weather pattern will be maintained across North America over the next 2 weeks (ending July 9). Short waves in a strong NW flowing jet stream look to produce showers/storms every 3-4 days. Rainfall totals with each system are forecast in a range of 0.5-1.25″ with the best chance for heavy rain occurring across IL, IN and OH.
- The 11-15 day forecast calls for a ridge of high pressure over the SW US with any heat impacting the 4 corner area. This is a different solution from what has been shown previously. The ridge reaches into the S Plains but has no impact on the Midwest. Under this pattern, showers/storms would occur through the Delta/Gulf States with some areas seeing upwards of 4-6.00″ of rain. Midwest temperatures would be near to above normal with near normal rain into July 10.
- Central US weather is the driving price determinate into July. The June 30 Stocks/Seeding Report will have surprises, but without adverse weather, any bullish surprise will be sold. Amid the coming 10 days of warm/wet weather, a turn to extreme heat is needed to adversely impact corn yield. Soybeans are a crop of August, but the risk of trend line or above yield is rising with favourable weather into mid-July.