- Although the US stock market (NASDAQ) is nearing new all-time highs and does not appear to care on US/China trade differences, Chicago does care, with sharp losses noted this morning with corn/soy pacing the decline. Wheat is following the summer row crops lower with some support offered by rising Black Sea wheat futures. The Russian dryness in west and wetness across Siberia is being noted. The time for getting the spring wheat crop in the ground is passing. Funds are liquidating stale Chicago length with US/China trade uncertainties and the US biofuel policy in focus. The charts are bearish and end user pricing is not enough to slow the decline. The next area of support is noted at $9.90- 10.00 in July soybeans, $3.77-3.80 July corn, and 4.95-5.05 basis July Chicago wheat. We expect that these support areas should hold with 80-85% of the summer row crop growing season ahead.
- Chicago brokers estimate that funds have sold 12,000 contracts of corn, 6,500 contracts of soybeans, and 5,200 contracts of Chicago wheat. In soy products, funds have sold 4,200 contract s of soymeal and 2,200 contracts of soyoil. End user pricing is the strongest in corn and soybean via feed demand.
- For the week ending May 31, the US exported 20.5 million bu of soybeans, 12.5 million bu of wheat, and 61.2 million bu of corn. The soybean and wheat export totals were on the lower end of trade expectations. US corn exports remain robust. For their respective crop years to date, the US has shipped ;1,552 million bu of US corn (down 185 million or 11%), 1,717 million bu of US soybeans (down 160 million or 8.5% from last year), and 1,010 million bu of wheat (down 134 million or 13% from last year). US old crop wheat and soybean exports need to be adjusted downward.
- US renewable fuels RIN prices hit a new five year low this morning as the Trump Administration prepared to announce that extra RINs would be available from US biofuels that are exported. The sharp fall in RIN values reduces the profit for blenders, hitting the biodiesel industry harder than ethanol. The expected announcement that E15 can be used year-round is not enough to alter the diminished margin for blenders. The abundance and cheapness of RINs will help the US fuels industry sidestep the yearly EPA mandate. President Trump tweeted this morning; “That US farmers have not been doing well for 15 years. Mexico, Canada and China have treated them unfairly. By the time I (President Trump) finishes trade talks, that will change”. We hope that US agriculture holds President Trump accountable on this promise! A meeting between Commerce Secretary Ross and President Trump will be held this afternoon. Our hope is that China’s offer to boost US ag purchases by $25 billion is accepted!
- The midday GFS North American weather pattern forecast is more amplified with a high pressure ridge which produces some “ring of fire” rains across the N and E Midwest this week. Rain totals should range from .3-1.25” with a few locally heavier amounts. The driest area will be closest to the mean position of the ridge in the Plains. Extreme heat of 90-100’s will be felt in the Plains and the W Midwest with spikes of similar heat into the Delta. Temperatures are warmer than prior runs and more in line with the overnight EU model. The midday model removed the risk of a tropical storm in the Gulf in the 11-15 day period with the ridge strengthening across the Midwest. The midday GFS forecast is more concerning for yield.
- A “give-up” mentality is noted across Chicago this morning as the bulls cave to the current break. We might agree with a bearish opinion if the date was July 4 rather than June 4! However, with dryness across E Australia, the Black Sea, the N China Plains and heat/dryness indicated for the Midwest, we feel that it is premature to be ultra-bearish. The US/China trade worry is the reason for the Chicago decline, and politics can quickly change. Our view is that weather will ultimately override politics. This is no place for new Chicago sales.