- Wheat rallies on unusual GASC tender for 3.8 million mt; Corn steady on lack of news; China back securing US soybeans.
- Midday Chicago values are mixed with the grains (corn/wheat) higher while soybean values sink. Wheat has been the upside leader as Egypt’s GASC tendered for an unusually large 3.8 million mt of world wheat from October through April under 270-day credit terms. The news pushed September Chicago wheat above its 20-day moving average at $5.405 and triggered a round of short covering. The 200day moving average has performed well in trading the wheat market for the past 5 months as futures prices have existed in dynamic bull-and-bear price trends.
- Soybean futures have held in the red as crop condition ratings gained an unexpected 1% in the good/excellent category. We note that condition ratings tend to more correctly gauge US crop yields following the August NASS crop report. Until then, crop ratings tend to be more of a beauty contest rather than an indicator of yield. Soy futures act heavily while the grain markets are finding support on breaks. However, please be aware that volume is well off from Monday, as portfolio managers are adjusting risk profiles lower.
- Chicago brokers estimate that managed money has purchased 3,100 contracts of wheat and 3,500 contracts of corn, while selling 4,400 contracts of soybeans, 3,400 contracts of soyoil and 300 contracts of soymeal. It has been a morning of buying grain and selling of the complex.
- Egypt’s GASC tendered for a large 3.8 million mt of world wheat from October through April with credit terms of 270 days and exporters having to offer 3 months of wheat in each tender timeslot. To the best of our knowledge, GASC has never tendered for a specific quantity of wheat for 9 months forward. GASC is tendering for enough world wheat to take them for the own domestic harvest. Whether this is because they fear an expanding Gaza war or the “price is right” is unknown. However, for the sellers, the risks are great, and few will be willing to take the logistical/execution risk beyond the end of the year. And Putin will have to decide if Russia will be willing to offer wheat beyond a couple of months as they currently are. It is an interesting tender, but we doubt that many will take the sizeable risk of offering 2025 export contracts.
- US June Census corn exports were 216.4 million bu or 30.8 million above the monthly FGIS estimate. US June soybean exports at 49.2 million bu were up 19 million from last year and slightly better than FGIS. For the September-June crop year to date, US Census corn exports are 247 million bu larger with US Census soybean exports 72.5 million bu larger that FGIS inspection data. July FGIS soybean exports were 48.3 million bu with corn at 192.0 million bu, Census exports will be larger. The USDA appears right at its 2023/24 US soybean export estimate of 1,700 million bu with 2023/24 corn export estimates being 25-40 million bu too low.
- China is active in booking 2-6 cargoes of US Gulf soybeans for October. USDA did not announce any new daily sales this morning, but we expect that they will on Wednesday and Thursday. China is using the break to add to forward coverage.
- The Central US GFS weather forecast at midday is like the overnight run with limited rainfall for the Central US over the next 10 days. The 7-day outlook is consistent with prior runs and our confidence in rain beyond the next week is low. It is the eastern US that will see all the rain from the remains of Debby. Dryness continues elsewhere. A moderation in Central US temperatures starts tomorrow, with heat holding across the S Plains and the Delta. Confidence beyond 10 days is low due to another tropical storm in the Gulf. Second half of August forecasts/outlooks will be changeable due to the tropic’s influence. Heat returns to the Midwest after August 14.
- A close above $5.405 Sept Chicago wheat will spark additional buying that could push values to $5.50 resistance prior to the USDA crop Report. Soybeans are a crop of August, and the Midwest weather forecast into mid-September matters for yield. Today’s soybean break is on limited volume and a recovery seems like a good bet for Wednesday amid an oilseed crush workers strike in Argentina. Bearish bets are totally based on rising US corn/soybean/spring wheat yields in Monday’s report. We maintain that US corn/soybean acres will both be cut by 1 milliona cres each on latent seeding.