- Low volume and mixed has been the morning with Chicago wheat rallying on tight deliverable stocks ahead of a delayed new crop harvest. Corn, KC wheat and soybeans are weaker amid improved Central US weather and the likelihood of improving US corn and soybean crop conditions.
- The USDA June Seeding & Stocks report looms for Friday along with the G20 meeting in Japan. The Trump Administration is raising expectations that the US and China could restart talks with a deal 90% completed (according to US Treasury Sec Mnuchin). The uncertainty surrounding US/China trade and US final seeded acres are likely to prevent rallies or breaks from carrying through. However, a bullish NASS Stocks/Seeding report is needed for the bulls to feel any real comfort heading into mid-July. After Friday’s report, the market will be looking past seedings, and acutely focusing on yield. It is US and world weather that will drive Chicago price direction until the August USDA Crop Report. FSA data on Prevent Plant becomes available in mid-August/September.
- Chicago traders estimate that funds have sold 4,200 contracts of corn and 3,600 contracts of soybeans, while buying 3,100 contracts of Chicago wheat.
- Early Russian wheat harvest data shows yield that is equal to or slightly above last year. The data suggests that although Russian wheat was adversely impacted by hot/dry weather over the past three weeks, the quantity loss is not substantial with the heat/dryness helping to boost protein/gluten content. This could be a big help for Russia in finally being able to sell into the Saudi and Algerian wheat markets. Both are looking at Russian wheat from this harvest, and this year’s high-quality crop could allow the Russia to make commercial sales. The EU has looked upon both markets are being their mainstay, so a Russian intrusion would be bearish to EU/Matif wheat prices.
- Stats Canada released their 2019 seeded acres report this morning. Canadian farmers indicated that they will seed 25.6 million acres of wheat (down 100,000 acres from last year), 20.9 million acres of canola (down 1.9 million acres), and 3.3 million acres of oats (up 250,000 acres). The wheat seedings decline was all durum with seeded acres down 1.2 million acres at 5.0 million. This means that Canada will remain an aggressive exporter of spring wheat through the 2019/20 crop year. The report showed farmers reacting to the politics of China/Canadian canola import dispute and seeding more grains. Note that Canadian farmers seeded 7.4 million acres of barley, an increase of nearly 1 million from last year. With normal summer weather, Canadian barley is likely to work as a feedgrain into the US to supplant our reduced corn production.
- Last week, Ukraine, Brazil and Argentina each exported more corn than the US. We think this is a first in terms of non-US corn exports vs. the US.
- A drier weather forecast is offered for IA/WI (down 0.75-1.50″) and slightly wetter for IL/IN/OH (0.25-0.75″) over the next 10 days. The midday GFS forecast has a history of being the wettest model of the day, but the model has no better than normal totals into July 5. We note that a ridge of high pressure will hold across the Central US for the next 2 weeks. The best weather for immature Midwest crops is abundant sunshine, warm temperatures and soft rains. This appears to be in the offing into mid-July. Also notice the big improvement in Canadian weather also. The bulls are disappointed by early Chicago price action. A gap-and-go day did not develop following the drop in weekly conditions as Chicago consolidates recent gains amid a favourable Central US weather. Chicago corn values have digested more than 2 billion plus bu of losses due to cool/wet spring weather. Above $4.70 December there has to be a fear of even larger losses due to adverse weather. World wheat supplies are huge.