- Chicago wheat/soybean futures have rallied to sharp gains with corn being pulled along at midday. The €uro currency rally occurred as their Central Bank left interest rates at 0% but promised to be a huge buyer of another $600 billion €uros ($672 million dollars) through their Pandemic Emergency Purchase Program (PEPP). The PEPP news pressured the US$.
- Research notes that the ag currencies, such as the Russian Ruble, the Brazilian Real and Argentine Peso are weaker at midday. US$ index selling is pressured largely by the stronger €uro. In fact, the Argentine Peso scored a record low vs the US greenback at 69:1.
- The morning fund short covering has pushed corn back to last week’s high while soybeans/wheat near upside price targets. July KC wheat’s 50 day moving average crosses at $4.745, which is being tested. With a harvest weekend ahead, we doubt that KC wheat futures will be able to rise too much more. Wheat unlike corn or soybeans is likely to see a smaller harvest amid the recent heat/dryness across portions of the Central Plains. This is no place to chase a Chicago rally, but it is always difficult to measure when the fund short covering will be completed.
- The US homestay grains of oats/rice have enjoyed a strong rally amid expanding domestic consumption. Oat milk and rice are the new staples for home chefs which has fuelled demand. Unfortunately, the homestay has not expanded US #2 yellow corn or soybean domestic use. In the case of corn, homestay has lowered domestic demand via ethanol grind reductions. WASDE is likely to cut US ethanol on Thursday by another 50-100 million bu due to the lower May grind.
- US farmers have been good sellers of old crop soybeans/corn this morning with merchandisers reporting that sales are the best in weeks. Cash sales are likely to persist with July soybeans holding an upside price target of $8.80 and July corn at $3.30-3.34.
- US export sales for the week ending May 28 were; 22.7 million bu of wheat (both crop years combined), 25.1 million bu of corn, and 18.2 million bu of soybeans. China showed up as taking soybeans and wheat (the wheat purchase was a switch from an unknown destination). The US weekly corn sales total was disappointing.
- For their respective crop years to date, the US has sold 990 million bu of wheat (up 41 million or 4%), 1,593 million bu of corn (down 306 million or 16%) and 1,567 million bu of soybeans (down 148 million or 9%).
- Chicago brokers estimate that funds have bought; 14.400 contracts of corn, 9,100 contracts of wheat, and 9,400 contracts of soybeans. In the products, funds have bought 5,400 contracts of meal while being flat soyoil.
- The US midday weather forecast is consistent with the overnight run. Gulf activity will produce showers/storms across the Delta with Midwest totals ranging from 0.5-2.50″ over the next 10 days. Warm temperatures prevail for another 5 days before much cooler temperatures flow southward. The sunshine and cooler temperatures will be ideal for Midwest row crops that have been warm/wet this week. There is no indication of a drought pattern and US crop conditions are likely to improve further on Monday.
- The Chicago rally is all about “market make-up” with funds heavily short corn/soymeal. Funds are likely to enter a modest long in wheat/soybeans before seasonal highs are confirmed next week. We look for US corn and soybean good/excellent ratings to rise another 1-2% on Monday.