- Corn/soybeans score fresh lows on large US crop fear; French wheat farmers seek help on catastrophic harvest; GFS weather forecast warmer for the Midwest in the extended range.
- Chicago grain futures are lower at midday on slowing volume as the soybean market scores fresh contract lows. Soybean prices have been searching for improved export demand (China) while soy product prices are helping to keep crush margins strong. We calculate board crush margins at a highly profitable $1.80/bu with the oil share contribution to margin sliding back to just under 39%. EIA will be out on Thursday with their May feedstock production estimate which is always closely followed by the industry. Soyoil should gain relative to soymeal heading into the weekend as cash soyoil values are trading at 2-4 cent/pound discount relative to imported Gulf UCO. Soyoil has priced itself into feedstock blends that will be important heading into the end of the year. Soybean futures are technically oversold, but there is no indication of a bottom on the charts amid fresh contract lows.
- September corn futures scored new contract lows at $3.8925, while Chicago September wheat held Monday’s new contract low at $5.1425. The grains are holding better than the complex with wheat trading inside of Monday’s price range. Wheat values hold a developing bullish story once the charts turn higher and seasonal EU harvest price pressure abates.
- The USDA did not announce any daily sales of corn, soybeans, wheat, or soy products. As the US export season arrives, traders are watching to gauge future US export purchases.
- Chicago brokers estimate that the managed money has sold 6,900 contracts of wheat, 6,700 contracts of soybeans and 1,900 contracts of wheat. In the soy complex, the managed money has sold 3,900 contracts of soyoil and 1,800 contracts of soymeal.
- Bloomberg is reporting what we have reported for most of the past 10 days, a catastrophic French wheat harvest with crop quantity and quality in sharp decline. French farmers are calling on the government to provide financial aid with yields down 15-28% and a crop as low as 26 million mt. But the real worry is related to low test weight wheat that does not meet French milling standards. How much wheat France has for export in the months ahead will be closely followed with exporters able to meet export milling standards from a blend of old and new crop supplies. Paris wheat futures are well above contract lows due to the French/German wheat crop uncertainties.
- Tunisia purchased 125,000 mt of optional origin soft milling wheat and 50,000 mt of durum wheat in a concluded tender for August-October. The purchase price was $243.99-245.77/mt basis CIF. The wheat is expected to be sourced from the Black Sea on cost. We calculate fob values for August at $225-227/mt which is close to current valuations.
- Monday’s Chicago soyoil volume was one of the largest on record at 364,427 contracts, the biggest daily volume in 8 years. Soyoil spread trade was massive and there is leftover selling that is bleeding into today’s marketplace on fresh selling from managed money.
- The Central US GFS midday weather forecast is like the overnight solution. The forecast shows big heat for the Central US which includes the W and S Midwest with high temperatures to reach the 90’s to lower 100’s. Scattered showers will dot the E Midwest for the next few days before a hot/dry pattern emerges on Friday and lingers into August 8. Severe weather with Derecho winds is forecast this afternoon across portions of E IA, MO, and into W IL. The extended range 11-15-day forecast holds a strong ridge of high pressure across most of the Central cornbelt with extreme heat over the Eastern US.
- It is the end of the month and August deliveries will be out overnight. Private crop estimates will be released in coming days ahead of the USDA August 12 report. Wheat has a developing trade story on EU/Russian quantity/quality losses, while soyoil funds support faltering UCO and tallow imports and domestic usage. China is expected to step forward in August with a sizeable US soy purchase program. A first notice day bounce expected on Wednesday.