- Chicago ag markets are soaring at midday with funds covering net short corn and wheat positions. Soybean futures are not reacting with as much upside vigour with last week’s high offering resistance at $9.195 basis November fuyures. Chicago has a firm tone at midday and a higher close is expected.
- A top in the corn market will likely be formed when funds have covered their net short position estimated at 88,000 contracts at the start of today’s trading. Funds are adding to an already large net long in soybeans. Traders assume that the high yield print from NASS was seen in August. The big question is how far will yields decline in the September WASDE report. IA’s straight-line winds and the dry finish to the growing season complicates the yield/harvest outlook. Early cutting across the Gulf States and NE/KS has produced better than expected corn yields. But this early corn was not impacted by the late season dryness. We look for corn/wheat volume to stay strong into the close.
- FAS/USDA reported sales of 408,000 mt of US corn to China and 100,000 mt to Japan. China also booked another 204,000 mt of soybeans with 145,000 mt to an unknown destination. The China corn purchase had been rumoured since late last week and was finally announced this morning.
- Chicago brokers estimate that funds have bought 30-32,000 contracts of corn, 9,600 contracts of soybeans, and 7,200 contacts of Chicago wheat. In the products, funds have bought 2,800 contracts of soyoil and 4,000 contracts of soymeal. US farmers are selling the rally with old crop corn sales. Already more than 220,000 contracts of December corn have changed hands.
- Hurricane Laura looks to take a slightly more westerly track and make landfall in Eastern Texas. Each model run has the storm being slightly further west than the prior run. Louisiana farmers reported that 68% of their corn was harvested through Sunday with reports that they will rush to cut the remaining crop before Laura makes landfall Thursday. The loss of downed LA corn will be modest, but heavy rain will slow soybean maturation.
- The lowest offer in the GASC wheat tender was $213/mt for 55,000 mt of Russian wheat. GASC secured wheat at $206.73/mt on August which makes today’s offer just over $6/mt higher. Traders are waiting to see how much tonnage is secured. Black Sea offers for September are holding at $203/mt.
- CONAB estimated that based on record high prices/profits, Brazil would produce a 2021 soybean crop of 133.5 million mt and corn crop of 112.9 million mt. The 2021 soybean harvest would be up a whopping 13 million mt with corn up 10 million from the current crop year. With normal weather, Brazil should harvest record large crops and add to the existing world grain/oilseed supply. Brazil looks to be seeding wall to wall with the Real at $5.60:1 US$.
- Traders are already discussing/factoring in a further decline in US crop condition ratings next week. Most are looking for another 2-3% fall in US corn good/excellent ratings on Monday due to this week’s heat/dryness.
- The midday GFS weather forecast is wetter across the W Midwest than what was offered overnight starting on the weekend. Hurricane Laura makes landfall slightly further west across far E TX with the system hooking E/NE into OH. A cold front is dragged southward that produces 0.5-2.00″ of rain across MN/IA/WI early next week. This rain is desperately needed. A cool with near to above normal rainfall pattern follows. There is no evidence of a frost into September 10. The coming rain and cooler temperatures will aid soybeans more than corn.
- Fund buying has been massive in corn with the next upside price target at $3.60 December. The bulls have a free “yield” pass to run values higher until the rain starts to fall later this week and weekend. Yet, it is still a big 2020 US corn and soybean crop, but the top end of yields has been taken off.