- It has been a broadly mixed morning in Chicago as corn and soybeans push higher at midday, while wheat trades lower. Dec Chicago wheat pushed below last week’s low and an uptrend line which triggered a pile of fund selling. However, the wheat market has held its 200-day moving average. The excessively long fund position in wheat is causing prices to flip and flop more aggressively, but this is something that we think that everyone must get used to until the Russian’s start to slow their wheat exports in October or November. We look for a mixed close with corn yield data starting to become more numerous across the S Midwest later this week. Delta corn yields are disappointing, and it will be key to see whether that trend follows northward. Soybeans are firm on soymeal demand amid the higher Argentine taxes.
- US export inspections for the week ending August 30 were; 52.5 million bu of corn, 28.3 million bu of soybeans, and 14.4 million bu of wheat. Corn exports were above trade estimates, while wheat was less than. For their respective crop years to date, the US has exported 2,273 million bu of corn (up 32 million or 1.4%), 2,068 million bu of soybeans (down 57 million or 2%), while US wheat exports at 192.3 million bu are 93 million or 33% behind last year. We would look for WASDE to adjust its 2017/18 soybean export pace upwards while trimming corn by 15-20 million bu. The US wheat export pace remains disappointing as Russia pumps out record early season tonnages.
- A newswire has reported that; “Russia meets with traders and sees no need to limit exports”. We believe that this headline is not truthful. Russia indicated to its exporters that it will monitor the weekly export pace with a tax decision coming that is in line with last week’s announcement of 30 million mt of total grain exports for the 2018/19 crop year. It is calculated that such export taxes could be in place by November/December as wheat continues to leave Russia at a record fast pace. There was no statement from the Russian ag ministry that it is willing to allow free grain exports through the crop year. Such a statement would doubly irritate the politically powerful Russian livestock lobby.
- We look for steady to a 1% decline in corn/soybean good/excellent ratings later this afternoon. The S Midwest corn harvest will start in earnest later this week. Sporadic test cutting offers some corn yields above and below last year.
- The central US GFS weather forecast is slightly farther south and east with excessive wet weather than the overnight or the EU model runs. The midday model is struggling with frontal positioning amid trying to determine the path of Hurricane Gordon. Our guess is that the projected midday GFS rains are too far south and will be pushed northward in upcoming runs. The wet areas of the Midwest are likely to receive additional moderate to heavy rain. Unfortunately, the wet flow persists into the 10-15 day period which will only exacerbate low lying flooding. This is raising concern for the early corn harvest. Temperatures stay near to above normal with no cold threats in sight. Minimum lows into mid-September across the Northern US will be in the 50’s to mid-40s.
- Chicago is trying to analyse through the political alterations of the weekend. Argentine export taxes are bullish to corn and soy products, but Russia is pumping out record wheat exports as farmers try to beat potential taxes or a halt of wheat trade amid rising domestic flour prices. Large US corn/soy yields are dialed into price, the key question going forward is whether yields are record large. Our view is potentially in beans, but questionable in corn. We favour buying grain breaks.