- Chicago values are sharply lower at midday on rising US corn/soybean crop discussions prompted by strong NASS US crop ratings and initial estimates from StoneX (formerly INTL FCStone) on US final corn and soybean yields. The market is fearing a big crop with widening talk of record large US corn and soybean yields from producers and traders. Whether it is the Russian wheat crop, or the Ukrainian corn, and now US corn and soybeans, the world appears to be overproducing grain amid a world economic outlook that is darkening on rising Covid-19 infections.
- Chicago has a heavy feel with December corn contract low noted at $3.22 while soybean futures are testing last week’s low. September corn has already scored new contract lows with the weekly chart showing support at the late spring low at $3.00. Funds are long of soybeans which is adding to the downside price risk. Chinese demand for US soybeans is modest and most Asian traders are turning bearish of Chicago beans on crop size.
- Chicago brokers estimate that funds have sold 3,400 contracts of Chicago wheat, 7,700 contracts of corn, and 9,200 contracts of soybeans. In soy products, funds have sold 3,600 contracts soymeal and 2,700 contracts of soyoil. The fund long liquidation is expected to increase if November soybeans fall below $8.80.
- Cash-connected traders report that farm selling of old crop corn has quickened this morning with many just giving up on stored corn prices rising. Farmers are willing to accept a better basis bid today than what will likely be offered during harvest. Record large US corn and soybean yields would produce a combined summer row crop that would strain storage availability this autumn. Producers are better off selling any remaining stored grain now. The only hope for a sustained rally is an historically early frost/freeze during the first half of September.
- FAS did not announce any new US soybean, corn or wheat sales this morning. If Monday’s sale of US soybeans to unknown was not China, then it has been a week since China purchased US soybeans. The lack of demand is worrisome to traders with China continuing to import record soybean tonnages from Brazil.
- The USDA/NASS/WASDE will release their August Crop Report next Wednesday. The report is a farm survey only. The NASS estimate is based on farmer reports on their yield expectations as of August 1. NASS will send their crop enumerators to the fields in early September for a more definitive yield assessment. Following the USDA August estimate, a slew of private crop tours will be offered, including the Pro Farmer Crop Tour that starts on August 17. The market will have many assessments on “how big is big” heading into the end of August, which will likely cap Chicago rallies. Therefore, we doubt that seasonal Chicago lows won’t be formed until mid-September or mid-October.
- The midday GFS’s weather forecast details are drier in southern IA but wetter in SD and MO over the next 10 days. Should the forecast verify, moisture deficits will persist in IA while positive moisture anomalies stay intact elsewhere. Overall, the Central US pattern will feature mild/dry weather into the weekend. A warmer/wetter pattern follows. Weak high-pressure ridging will reach into the Central Plains and Midwest, with a broad trough/ridge pattern forecast thereafter into Aug 18. Light but daily rain will impact the N Plains and Midwest Aug 10-25. Cumulative totals in excess of 1″ will favour SD, WI, MO, IL and IN. Temperatures warm beyond the weekend.
- The lack of meaningful supply issues has allowed negative seasonal trends to take hold. Longer term, markets need to boost consumption, which will be a more difficult task in this era of Covid.