- HEADLINES: Corn/Soy rally sharply on S American cold; China buying of PNW soybeans for October; Covering before the NASS stocks/seeding report.
- Chicago futures are sharply higher at midday with corn and new crop soybeans the upside leaders. Spring wheat futures have sagged from fresh contract highs on profit taking ahead of the Stats Canada Seeding forecast that will be out Tuesday morning. Traders are also debating flooded/drowned out crops in Northern Missouri/Central Illinois along with frost/freeze coming from Brazilian corn is providing the upside price lift. And traders are coming to understand that Friday’s SCOTUS decision to allow EPA waivers in a non-consistent fashion will not have much of a demand impact under the pro biofuel Biden Administration. No renewable biodiesel construction is being slowed or halted which is the driver of new crop crush demand.
- Dec corn has rallied sharply to test initial chart-based resistance at $5.40-5.50 while Nov soybeans are back above $13.10. Soyoil futures have recaptured all of Friday’s losses. However, the big change is that world soymeal demand which is shifting back to the US amid the sharp rise in Brazilian/Argentine export premiums. And US soybeans off the PNW are again competitive with Brazilian offers on a landed basis into China. With Chicago soymeal open interest at its lowest level since 2009, end users are making new forward purchases.
- Brazilian corn is facing frost/freeze losses that will add on top of drought yield reductions. Brazilian corn prices are rising sharply this morning on the cold weather threat with freeze warnings out for Mato Grosso, Mato Grosso Do Sul, and Parana overnight. We note that in Parana, 14% of the corn crop is pollinating, 61% filling with 24% mature. The frost catches that March seeded corn crop at a vulnerable stage. We estimate the 2021 Brazilian corn crop at 87-88 million mt based on early harvest yield prior to the freeze. We also note that 9% of the Parana winter wheat crop is in germination and 91% in the vegetative growth stage, also vulnerable.
- US export inspections for the week ending June 24 were; 40.0 million bu of corn, 3.8 million bu of soybeans, and 10.5 million bu of wheat. The corn exports were below vessel counts and trade expectations which we see at 53-57 million bu. We note that last week’s US corn loadings were raised to 69.9 million bu, an increase of 11.6 million bu. Someone is underreporting exports via market considerations. And remember that Census US corn exports are 153 million bu larger than FGIS inspections through April.
- We understand that China is back bidding for US new crop soybeans with 3-6 cargoes said to be sold off the PNW this morning. The Chinese have started a routine autumn US soy buying program. We look for USDA to confirm new sales in coming daily reports. Brazil has rapidly sold old crop soybeans/soymeal with Chinese demand now shifting to the US PNW.
- Chicago floor brokers estimate that managed money has purchased 4-5,000 contracts of wheat, 10-12,000 contracts of corn, 7-7,500 contracts of soybeans, 3-4,000 contracts of soymeal and 6,500 contracts of soyoil this morning.
- The midday GFS weather forecast is wetter across Illinois/Indiana /Missouri and drier across the Southern Plains. The last thing that Central Illinois requires is additional heavy rain amid widespread reports of flooding. Crops witnessing flooding would be best served by cool temperatures, sunshine, and winds to promote rapid drying. The midday forecast maintains arid weather conditions across the N Plains and NW Midwest. Iowa will need 1-1.50″ of rainfall each week to prevent crop yield deterioration.
- Temperatures stay hot across the NW US with that heat pushing east starting this weekend. The Plains and W Midwest endure widespread 90′s to low 100′s mid next week. The heat will add to the growing crop stress.
- The Brazilian winter corn crop is in rapid decline with a new threat of a frost/freeze while heat/ dryness returns to the N Plains/NW Midwest. Our Chicago view stays bullish on expanding US demand potential and supply losses.