- Chicago rally on warm to hot Central US weather after July 16; Additional wheat receipt cancellation: Midday GFS weather forecast adds rain to the Delta/S Midwest.
- Chicago futures are higher at midday with wheat being the bullish stalwart. The decline in the French wheat crop due to lower than expected harvested yield data and the decline in the value of the US dollar (US employment outlook showing weakness with more than 65% of June’s job gains coming from government) is underpinning commodity valuations heading into the weekend. Corn and soybean futures have been followers of the wheat rally with managed money short covering in soyoil lifting August futures closer to key resistance at $49.80-50.20. Like the wheat market in April, managed money can enter too large a net short which forces a dramatic rally. Longer term upside price targets for August soyoil rest at $0.53-0.54/pound.
- US traders are reluctant to take any large new positions until Monday when crop condition ratings and the CFTC Commitment of Traders report will be released. Trading volume is thin with the July WASDE report due next Friday with NASS stocks/seeding updates being incorporated. WASDE will not alter their corn and soybean yield estimates at 181.0 or 52.0 bushels/acre, respectively. The unknown is whether WASDE will drop their US 2023/24 US corn feed/residual estimate by 50-75 million bu. The only bullish hope for the July WASDE would be world crop cuts.
- The Anderson’s cancelled another 198 wheat deliverable warehouse receipts against Chicago futures today taking total to 561 contracts. The bulk of the wheat is being held in Maumee. The hefty 918 contract drop in Chicago deliverable wheat receipts/supplies is a surprise with the Midwest harvest reaching a frenzied pace. Either the US is seeing fresh export demand or the old crop wheat is needed for blending purposes. The sharp fall in deliverable receipts is helping to confirm seasonal lows.
- Indonesia is claiming that it is not targeting China with import duties against textiles and other consumer goods. However, Indonesia seeks to protect its domestic manufacturing sector from unfair competition. Whether this recently announced government comment, will prevent Indonesia from announcing duties of 100-200% on more than 50 Chinese consumer goods is unknown. Nor is it known if such tariffs are enacted, whether China will retaliate against Indonesia palmoil imports with their own duties. The rally in world vegoil prices was initially ignited by Indonesian rumours of proposed duties on Chinese goods.
- US weekly grain export sales for the week ending June 27 were 29.6 million bu of wheat, 26.4 million bu of corn (14.1 million of old and 12.3 of new crop), and 13.9 million bu of soybeans (8.4 million of old and 5.5 of new crop). For their respective crop years, the US has sold 253.5 million bu of wheat (up 84 million or up 49% from last year), 2,115 million bu of corn (up 579 million or 37%), and 1,646 million bu of soybeans (down 281 million or 14.5%).
- The midday GFS weather forecast is wetter across the South-Central US with soaking rain for the Delta and Gulf States from the remains of hurricane Beryl. Rainfall totals are estimated in a range of 1.50-6.00” and locally heaver. This area has been dry, and the rain will assist crop yields. A high-pressure ridge holds across the Intermountain West in the 10-15 day period which will produce extreme heat across the Plains and the western section of the Midwest. A dip in the jet stream allows for rain across the E Midwest from July 15-18. The forecast is warm with limited rainfall across the Northern Plains and the North Central Midwest into July 20. The yield risk is based on the developing heat.
- China has not yet booked new crop US soybeans as of late June. Unknown sales of US soybeans could be to China, but the lack of visible China demand is a concern. Heat is coming to the Plains and the far Western Midwest which will cause rapid drops in soil moisture. US corn/soy crop ratings on Monday are expected to be steady to 2% higher amid cool temperatures and rain this week.