- Chicago grain and oilseed futures are higher at midday on the wet weather across IL and rumours that China has been buyer of US August/September soybeans. Also, China has issued another 1.5 million mt of TRQ’s for corn imports from world exporters. The Chinese demand and wet portions of the E Midwest is catching the market too short following May first notice day and the end of a month.
- A bounce is underway on short covering. An obvious aspect of the Chicago market is the lack of orders resting above the market’ When funds desire to cover a portion of their shorts, prices rise quickly and “air pockets” develop in the market. Bear market rallies are often short/swift and then turn back lower just as quickly. Amid improved weather forecast and China being on a week long holiday starting Friday, we doubt this advance can garner much new demand. End users nor importers are willing to chase the rally, meaning that further gains must be left to fund short managers. We look for a higher close, but the close will likely be well off the midday highs. Merchants report that the movement of old crop grain has improved on the morning rally.
- Chicago brokers estimate that funds have bought 8,200 contracts of corn and 7,100 contacts of soybeans, while selling 1,900 contracts of Chicago wheat. In soy products, funds have bought 3,400 contacts of meal and 2,600 soyoil. Fund managers want to bank some of their profits before May.
- US exporters report that China has secured 6-8 cargoes of Gulf soybeans for LH August/September. The purchase was completed after the Chicago normal opening with additional interest said to be resting for October. Chinese crushers appear to have most of their summer imports need fulfilled outside of the last half of August. China starts on a week long holiday on Friday and wanted to secure additional forward coverage for autumn import needs.
- China issued another 1.5 million mt of corn TRQ import licenses for use by October. The corn does not have to be secured from the US but will be sold by the cheapest supplier. S American corn is offered below the US during late summer. Last week, China was looking at offering 2.0 million mt of TRQs to aid livestock producers in SE China. The TRQ issuance was less than expected and it is unknown if the corn will be shipped in an old or new crop position. Traders hope that any nearby demand can be filled by the US.
- For their respective crop years to date, the US has sold 953 million bu of wheat (up 18 million or 2%), 1,447 million bu of corn (down 366 million or 20%), and 1,434 million bu of soybeans (down 222 million or 14%). The US corn and soybean sales pace at this late date of the crop year argues for WASDE to adjust down their export estimates in the May 12 report.
- The US sold 22.9 million bu of wheat (old/new crop), 53.4 million bu of corn, and 39.6 million bu of soybeans. All sales were better than expected and included Mexico for corn and China for US soybeans. The China soybean demand was largely known. China showed up as large buyer of US pork and another 1,000 million mt of US beef.
- Excessively wet weather has caused flooding in portions of Central IL which will require 4-6 days of needed warm/sunny/windy weather before planters can return. Thankfully, the midday GFS forecast offers a 6-7 day spate of warm/mostly dry weather to aid the drying progress. The forecast is like the overnight run in that sunny and warming weather will be noted for much of the next week. Cooler temperatures return in the 9-14 day period with better rain chances for the N Plains and the W Midwest.
- It is a month end/China short covering fund bounce. The weather is favourable for Midwest seeding and for Black Sea rains. China will be on holiday Friday and new interest is expected to fade.