- Chicago markets are mixed at midday with soybean/corn and wheat/corn spreads being unwound. The volume of trade has been limited with a 2 million mt sale of US corn to China not sparking any excitement. Traders appear to be unwinding long anything vs corn and there is a weak under-tow to midday valuations. We look for a steady to slightly lower Chicago close with large pending supplies acting to cap rallies as seasonal price trends are bearish into the end of August, and the arrival of deliveries against September futures.
- Chicago floor brokers estimate that funds have bought 6,200 contracts of corn, a net 900 contracts of wheat and 7,800 contracts of soybeans. In soy products, funds have sold 1,100 contracts of soymeal while buying 2,700 contracts of soyoil. Funds are at the sell side of Chicago at midday in lite volume.
- FAS confirmed that the US sold 1.937 million mt of US corn to China and 130,000 mt to an unknown destination. Commercials suggest the buyer and seller is COFCO, which introduces some mistrust, except that COFCO often acts as agent for private Chinese companies. The sales are for 2020/21 with known China corn commitments rising to 6 million mt of US corn (or 236 million bu).
- No US soybean sales to China were announced, which would have been more important with commercial traders suggesting that the China corn purchase occurred weeks ago. This is now the third consecutive day that China has not secured US soybeans. We noted earlier this week that China booked a few US cargoes, but that the tonnage levels may not have exceeded 100,000 mt from each seller which would trigger a daily sales announcement. China needs to be booking 1.5-1.7 million mt of US soybeans weekly to have any chance of reaching its Phase One ag obligation.
- US Weekly Export Sales for the week ending July 23 were; 24.9 million bu of wheat, -1.2 million bu of old crop corn and 25.1 million bu of new crop, and 9.5 million bu of old crop soybeans and 122.9 million bu of new crop. The huge new crop sales of soybeans were well telegraphed by the daily sales announcements. Nonetheless, any week that that US can say that sell 135 million bu of soybeans is a solid week of demand.
- For their respective crop years to date; the US has sold 353 million bu of wheat (up 27 million or 8%), 1,718 million bu of corn (down 244 million or 12.5%), and 1,719 million bu of soybeans (down 71 million or 4%). We look for US 2019/20 soybean exports to be cut another 25-40 million bu while WASDE holds US corn/wheat exports steady in the August report.
- Midwest farmers are showing considerable interest in seeding SRW wheat this autumn based on current wheat/corn and wheat/soybean price relationships. August Chicago prices will determine the winter wheat revenue insurance price in mid-September. But based on Dec 2021 corn futures at $3.62, the interest in SRW is high. And Southern US farmers are looking at double crop wheat with beans.
- The midday GFS weather forecast is consistent with the overnight run with soaking rainfall for the southern 2/3′s of the Midwest, Delta and the SE US. The forecast is drier across the NW Midwest where rain totals of 0.15-0.85″ are offered. The 10-15 day period offers improved rain for the NW Midwest, but temperatures will be seasonally cool ranging from the 7O’s into the mid 80′s. The midday GFS forecast keeps any high-pressure ridging located across the SW corner of the US into mid-August. There is no evidence of any extreme Midwest heat.
- The demand bulls are disappointed by Chicago corn market performance with values only slightly higher at midday. Key for soybean prices will be if FAS/USDA confirms new Chinese purchases on Friday. Otherwise, this week’s China demand is disappointing. Demand bulls must be fed every day and amid record large US corn/soy yields, such demand becomes more important into harvest. Chinese corn import demand is not based on market relationships, but Government policy.