- IA rains and technical trading left soybeans 16-17 cents lower at the end of Thursday’s trading. The overnight trade was down, and the break back under key moving averages triggered additional technical selling. Following Thursday’s selling funds are now estimated to be flat the soybean market. Weekly export sales were within expectations for both old and new crop soybeans last week. The US continues to collect old crop business, though new crop sales remain well behind, and are at a 10 year low of just 6.4 million mt. While sales on the books are well behind last year, commercial traders note strong Chinese interest on breaks, and the light sales total is not due to lower demand expectations. Rather, the rally in US/world soybean prices in July caught Chinese crushers by surprise, who have been waiting on a US price break to lock down forward margins. November soybeans closed out a chart gap left following the June NASS reports, and a more neutral outlook is offered into the USDA’s August reports next week. IA rains were not enough!
- Corn export sales continue to slow as recently harvest S American corn finds the global pipeline. Argentina’s harvest is now 69% complete, and S American supply pressure should be fading. We note that S American cash basis is higher yet again today, and Gulf corn is offered at parity with Brazilian origin, basis fob. Still, new demand has shifted to S America as evidenced by a string of crop-year low export sales. Crop finishing rains will impact the S Midwest, Delta and Southeast in the next 10 days, but precipitation will be lacking or completely absent from the Dakotas, IA and MN over the next 10 days. Informa this morning pegged US corn yield at 165.9 bushels/acre with production pegged at 13.85 billion, down 400 million from the USDA’s number in July. Trade estimates now seem to be centred at 162-166 bushels/acre, which if realised will keep Dec well supported above $3.65. A bullish outlook requires a sub 160 yield.
- Excess wheat market length continues to be liquidated, particularly as corn and bean markets falter, thereby keeping wheat’s premium to corn intact despite weaker futures prices. However, we estimate that managed funds have sold an estimated 25,000 contracts since last Tuesday, and so their net position this evening is pegged at a net long of just 3,000, vs. 45,000 in mid-July. World futures have mostly followed the US, but amid strength in the €uro and a lack of farmer selling, global fob prices are very little changed this week. Russian wheat is offered at $196-198/mt for Sep/Oct delivery. Hi-pro German is offered at $208-210. Comparable Gulf HRW is offered at $193-198, and remains easily the world’s cheapest quality milling wheat. Indian cash prices are still in excess of $250/mt, and in the face of falling Aussie crop estimates this could disrupt the world trade matrix further. We are in no rush to sell this market amid large potential export demand, and as the rush for quality wheat supplies likely has not begun. Seasonal lows are normally formed by August 12th.