- Chicago summer row crops rally as Central US heat builds; Unknown destination buys US soybeans; World wheat trade down 1 million mt via Turkey.
- Summer row crop futures are higher with wheat values sagging on intra market spreading at midday. Hot/Dry Plains and W Midwest weather and fresh Chinese demand has rallied soybeans back to early week highs. A close above $10.87 November soybean futures argue for a recovery back to $11.25-11.50 on the charts as soymeal futures rise on tight domestic supplies in the US and slowing sales from Argentina amid rumours of a crush industry strike next week.
- Soyoil has fallen back to its recent low, but export and biofuel demand is expected to underpin December soyoil futures below $0.43/pound. Minor oilseed values have a developing bullish story on tightening supplies of European and Black Sea rape/sunseed crops and as a flash drought that is adversely impacting Canadian canola. The loss of overseas crop production mandates larger US corn and soybean harvest. August weather will be critical for soy/corn/sorghum crops and run to run changes in the forecast are having a meaningful price impact on Chicago grain values. It is the duration of West Central US heat/dryness that is important heading into the last third of the summer growing season. It is all about August weather for Chicago values.
- Chicago brokers estimate that managed money has bought 4,000 contracts of soybeans and 6,500 contracts of corn, while selling 6,100 contracts of wheat.
- The USDA announced the sale of 264,000 mt of US soybeans to an unknown buyer, which is rumoured to be China. The sale was for the 2024/25 crop year.
- FAS/USDA export sales for the week ending July 18 were 11.4 million bu of wheat, 13.0 million bu of old crop and 29.3 million bu of new crop corn, and 3.3 million bu of old crop and 30.5 million bu of new crop soybeans. For their respective crop years to date, the US has sold 295 million bu of wheat (up 96 million or 48%), 2,166 million bu of corn (up 589 million or 37%), and 1,665 million bu of soybeans (down 271 million or 14%). Remember that through May, US soybean census soybean exports were up 72 million bu from Monday FGIS inspections with corn exports up 220 million bu. We see no reason to argue with the WASDE 1,700 million bu of soybean exports but could increase US corn exports by 25-50 million bu if the current pace is sustained for the next 7 weeks left in the crop year.
- Initial crop year world wheat trade via vessel counts is down 1.0 MMTs from the prior year at 8.4 million mt. The decline is largely due to Turkey and its use of domestic wheat stocks vs imports from the Black Sea. World wheat trade to other destinations is on par with the prior year and not showing a decline. Now it is early in the 2024/25 world wheat crop year with this being only the third week, but the decline from Turkey is likely to persist and slow Russian trade. Remember that Russia is expected to export 46 million mt in 2024/25 vs last year’s 53 million mt, so the early shortfall seems right. The disappointing aspect is that Turkey through policy made the demand adjustment, not the marketplace. It is hoped that Turkey returns to resume world wheat imports in October.
- The Central US GFS weather forecast at midday is slightly drier and warmer vs overnight forecast. Limited rain is forecast to fall across the US Plains, Canadian Prairies, and most of the W Midwest into August 4. Heat returns to the Central US on the weekend with highs ranging from the mid 80’s to the mid 90’s. Precipitation for the next 9 days will be focused on the Gulf States and SE US with widely scattered showers for the E Midwest on ridge riding storm systems. The GFS forecast projects amplified high pressure ridging across the Western third of the US in the 10–15-day period with high temperatures in the 90s/100s. There are clear signs of increased tropical storm activity in the Gulf of Mexico which is causing some forecast “fits” in the model.
- US ag analysts are dropping their 2024/25 US corn end stock forecasts below 2,000 million bu on expanding demand, both in exports and ethanol. Such stocks do not argue for December corn futures to fall below $4.00 for harvest lows. We see 2024/25 corn stocks at 1,750 million bu, which should rally December corn to $4.35-4.50, assuming a 180 bushels/acre US corn yield. And China is becoming active in US soybean purchases. Upside targets of $11-11.50 November are valid. US wheat values trade a range of $5.30-5.80 during August as the spring wheat crop is harvested.