- HEADLINES: GASC tender results awaited; E Midwest forecast wetter.
- Corn, soy, and wheat futures are mostly higher at midday with July futures in the summer row crops pacing the rally. July/August soybeans and July/ September corn futures are both trading at a $1.00 premium. The cash market is tight and short holders of July futures are buying their way out. Wheat futures have been a follower with new crop supplies available and the EU harvest starting to gather steam. The USDA Stocks/Seeding Report is Thursday.
- July futures have been big gainers on new crop futures due to strong cash bids. July corn in Central IL is bid above $8.20 and not securing many bushels. Cash soybean bids are more mixed with some cash basis bids in retreat while others firm. 30-60 cents over July catches the Central IL cash soybean market with bids back near $17.00. The US farmer does not hold much old crop soybean stocks and positive crush and ethanol margins has end users seeking additional forward coverage. The sharp rise in cash soymeal bids has deepened the green on crush. The July/November soybean spread is moving back out near $2.00/bu. Key will be what Midwest weather pattern emerges in July.
- We note that Central US soil moisture is the driest during the last week of June looking backwards to the 2012 drought. This elevates the need for and importance of July rains. Central US summer row crops can go backwards fast if hot/dry weather were to persist.
- The forecasts have been highly erratic and have not yet settled on a July Central US weather pattern. Today, the models have a high-pressure ridge setting up across the Intermountain West and progressing eastward. It is the amplitude and timing of the ridge that will be important. A tropical system will be the best way to replenish Midwest soil moisture. Currently, a tropical storm looks to take aim on Mexico, not the US Gulf. We need to take note of the dry Central US soil profile and the importance of early July weather.
- There are rumours that a Russian exporter has defaulted on a wheat sale of 300-600,000 mt according to commercial sources. The defaulted Russian wheat sale has importers wondering how trustworthy Russian exporters will be during the war. AWE continue to believe that Russia will struggle to export more than 32 million mt of wheat in 2022/23 regardless of their crop size due to logistical difficulties produced by economic sanctions. Russia is not offering wheat publicly beyond the next two weeks. USDA has Russia exporting 40 million mt, a total which is far too high.
- The midday weather forecast has added rain to the Central and Eastern Midwest beyond Monday. Rainfall totals are not gauged at 0.25-1.50” which adds hope to dry crops. The Plains are drier as a high-pressure ridge sets up across the Intermountain West and pulses eastward into the Plains and the W Midwest. The ridge will produce extreme heat with highs in the 90’s to the lower 100’s. The forecast models are trying to assess the July weather pattern and the final ridge location.
- The NASS Crop Report looms Thursday with traders discussing lower acreage estimates than industry guestimates. The July weather pattern is key post report direction. We hold a bullish longer-term view seeing any mid-summer decline as a longer-term buying opportunity. Tightening world supplies will cause wheat prices to seasonally rally post the report.