- Row crop markets are weaker this morning following stable/higher crop ratings Monday afternoon. Wheat has found some measure of stability ahead of Egypt’s tender results and amid similar price action in European futures. Egypt announced that it secured 350,000 mt of wheat for mid-October arrival. Few details are available, but the lowest reported offer was a cargo of Russian origin at $222/mt. This is rather aggressive given Russian quotes for October yesterday were pegged at $225. Egypt last bought wheat at $231/mt, basis fob, in mid-August. A purchase of Black Sea wheat is assured, but depending on tonnage today’s tender should offer lasting support to world wheat cash markets. Russia continues to dominate wheat trade, but this is speeding the process of exhausting its surplus. Russia has sold 1 million mt of wheat to Egypt so far in the marketing year, not including this morning’s purchase. Assuming much of this morning’s business was of Russian origin, this nearly matches the pace of last year, despite Russian wheat supplies declining 18.5 million mt.
- The US and China remain steadfast in their trade stances, and uncertainty remains over previously scheduled talks in November. Assuming Pro Farmer’s yield estimate, US soybean end stocks could balloon to 825-850 million bu, maybe more. Assuming trend yield in 2019, a 6-plus million decline in seeded acres is needed to pull 2019/20 end stocks below 600 million. US government aid is helpful, but a trade deal is needed to change the market from a structural bear.
- News on Canada joining the US and Mexico in a new NAFTA is variable, but the Canadian dollar this morning rests at a two-month high. The market is optimistic on North American trade.
- The midday GFS weather forecast in Australia features another meaningful rain event in far eastern NSW next week. This would further replenish soil moisture for spring crops. The EU model is largely dry, and so close attention will be paid to its next release this afternoon. Radar maps show widespread precipitation working across the E Plains, IA, MN and N IL. Soil moisture will be adequate for crop finishing, but perhaps too much rain will fall across the N Midwest over the next 8-10 days.
- The central US GFS weather forecast is little changed from previous runs. A steady flow of moisture will be centered on the NW Midwest and Great Lakes into Sep 6. Accumulation through the period in MO, IA, MN, WI and IL is estimated upwards of 2-5-plus inches. The heaviest totals will favor MO, IA and WI. Localised flooding is likely there into the weekend. Yet more rain is offered to the Western Corn Belt Sep 10-11, though confidence so far out is low. Temperatures stay near to above normal. Minimum lows into mid-Sep across the Northern US/Southern Canada will remain perched in the low/mid-40s.
- Corn and beans continue to reel from harvest pressure and liquidation of excess old crop supply. Soybeans remain a supply-driven bear, while work maintains a noticeable demand-driven recovery lies ahead in US grain prices. We estimate managed funds’ combined position in corn, wheat and soy at a net short 70,000 contracts, vs. a net long of 6,000 last Tuesday. Fund selling/liquidation will likely have run its course by mid-week.