• HEADLINES: GFS weather forecast cooler with some rain for Iowa on day 10; Ukraine corridor to start working this weekend? Bulls take profits on weather uncertainty.

• Soybeans surge in old crop cash squeeze; Midday GFS weather forecast less threatening for Central US crops; Rumours abound that several stranded vessels will leave Ukraine ports this weekend, Russia selling fob wheat.

• Chicago futures are mixed at midday with a strong early rally uncovering windfall profit taking from early week buyers. US wheat futures have set back on news that several stranded cargoes could leave Ukraine ports this weekend as a corridor is mapped out as agreed to by Russia and Ukraine. August soybeans rallied to $16.71/bu, their best price level since June 10, while nearby soymeal futures scored new contract highs above $513/mt. December soymeal is resting at contract highs with a push above $440/ton confirming a bullish technical breakout on the charts. The next upside price targets rest at $15-15.20 basis November soybean futures and $6.50-6.55 basis December corn. We maintain that market volatility is going to stay extreme with each new weather model run gaining in importance.

• Chicago brokers estimate that fund managers have bought 9,800 contracts of soybeans, 10,500 contracts of corn and 2,500 contracts of Chicago wheat. In the products, funds have bought 5,400 contracts of meal/6,400 contracts of soyoil.

• The soybean market has enjoyed its best weekly rally since 2004, 18 years ago. Record high US cash crush margins ($3.25-4.00/bu) along with Argentina slowing their soymeal exports as producers hold fast to cash soybeans due to soaring inflation, has sparked the recovery. US crushers look to produce at full capacity into the new crop US export season that starts in mid-September. Amid Brazil’s nearly sold-out soybean position of old crop, the US will gain world soybean demand going forward. And making matters worse, the 2022 US soybean crop is behind in maturity, which further adds to the bullish cadence with crush margins so profitable. Record large US soybean crush rates are expected in Q1 of the 2022/23 crop year which will firm cash basis bids.

• FAS/USDA reported the sale of 132,000 mt of US soybeans to an unknown destination. The purchase was one of the first sales announcements in weeks. US China relations are politically chilly, but China has an estimated 8.6 million mt of new crop purchases on the books with another 1.5-2.0 million mt of US soybeans held in the unknown destination category. China has about 1.5 million mt of old crop soybeans left to ship before the end of the 2021/22 crop year.

• Ukraine President Zelenskiy made a surprise visit to Chornomorsk near the southern city of Odessa today. He denounced the Russian blockade of grain and stated that Ukraine is ready to start feeding the world again. Whether the Russian’s allow Ukraine to export much corn/wheat will be closely followed once the stranded vessels leave. The Russian’s are aggressive sellers of their wheat in recent days with new purchases by N Africa/the Middle East. Chicago wheat/corn futures have been pulled off their highs on the news that a Ukraine Export Corridor could become operational this weekend.

• The midday GFS weather forecast is like the overnight run and keeps any meaningful precipitation confined to the S Plains, Delta and Midsouth into the first full weekend of August. However, there will be a few showers across the W Midwest late in the 10-day forecast. The mean position of the high-pressure ridge is further east on the latest run. And the GFS model struggles with ridge riding storm systems and where to place rain until 2-3 days before the storm’s arrival. The more eastern located high-pressure ridge and its clockwise upper air movement offers a better chance of NC Midwest showers. The midday forecast is warm to hot, but not as hot as the overnight run with fewer days of 90–100-degree heat across the N Plains/Minnesota. Highs elsewhere will range from the 90’s to lower 100’s for numerous days. The GFS forecast has rain for Iowa on Aug 9 with totals of 0.5-1.00”. Any Iowa rain will be welcomed!

• The less threatening Central US weather forecast is allowing corn, soy, and wheat futures to retreat from opening highs. Wheat values are falling on Russian grain sales amid the hope that the corridor will become operational this weekend. We remain bullish, but the midday GFS forecast is less threatening. The big question is whether the EU model will validate the more Eastern US high pressure ridge. The GFS forecast does rebuild the ridge in the 10-15 day period with a new round of searing Midwest heat. So, the midday GFS weather forecast is not calling for a pattern change.

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