- Stratégie Grains have cut French soft wheat output by 2 million mt to 36.5 million mt on account of damage caused to the crop by persistent rainfall.
- The Russian AgMin reports their wheat harvest to be well under way with over 4 million mt already gathered and yields looking promising at 4.45 mt/ha, up from last year’s 3.74 mt/ha. IKAR (the Russian consultancy, Institute for Agricultural Market Studies) forecasts the crop to be 65-66 million mt, up from 61 million mt last year.
- AgroConsult also report the Ukraine harvest to be under way again with improved early yields at 3.75 mt/ha, up from 3.2 mt/ha last season. They forecast the crop at 23.3 to 24.2 million mt, a drop from last year’s 26.5 million mt.
- Today has seen Chicago markets lower with soybeans pacing the decline and grains following. Rain across IL and bearish technical indicators are giving the funds second thoughts about holding on to their large (and largely stale) long positions. Selling has seen corn at fresh lows although wheat was holding yesterday’s lows. Soybeans have shed $1/bu in a few short sessions and funds are quoting “blood on the streets” as large margin calls are made. There will likely be a bounce, but this will only come when the funds have done eating their long and wrong positions, maybe at the end of the week or early next week.
- Early EU wheat and barley yields have failed to impress, falling below producer expectations, as excess rainfall has caused poor grain fill and test weights. Nitrogen leaching from soils has been suggested to be a cause leaving crops searching for nutrients. The barley harvest is well underway across France and early yields are down 6-15%. Barley yields are often is a good barometer for wheat, and the trade is braced for a smaller and low quality crop harvest. Wheat cutting will get underway in earnest next week and a better assessment of the French and S German crop will then be offered. As of today, disappointment is the word that comes up repeatedly when talking to European farmers.
- FOB premiums for corn keep rising as Chicago corn declines. September US corn fob is offered at $1.00 over, but Brazil corn in that same position is offered at $1.15 over or $180/mt. One would have expected that with the Safrihina corn harvest reaching 25% that there would be cash pressure on Brazilian corn export offers. However, no such pressure is being witnessed, and this has some speculating that the Brazilian corn crop could be well under USDA and/or private estimates or that the refilling of the pipeline is much more robust. Ukraine fob corn offered for October is now $.50/bu cheaper than Brazilian fob offers. The reduced Brazilian corn export program could push additional demand back to the US or Ukraine into early 2017.
- The funds are exiting their long positions as the soybean complex has fallen below key moving averages and their losses in corn have become sizeable! However, its only July 6th and sub $3.30 spot corn, or sub $4.00 spot Chicago wheat is just too cheap for what is currently fundamentally known. Moreover, we suspect that China is just waiting to pounce on the soybean market when there are signs of a bottom. China has a huge amount of cash soybeans yet to secure from September forward with spot crush margins now at their best levels since mid 2014. Consequently, we currently struggle to become significantly bearish soybeans with huge cash demand in the offing.