- Chicago markets have reversed to the upside as his week’s back and forth continues. The midday recovery has occurred despite negative weekly US corn sales and began prior to the midday GFS weather run. Chicago wheat has led the rally. It seems doubtful that neither bull or bear trends will be sustained in the near term. Improved Central US weather through the end of next week will cap rallies. Buy yield uncertainty is unprecedented and until crop conditions begin to correlate with actual yield (late July), the risk that corn yields fall sharply below trend in areas most affected by excessive rainfall will limit new farmer selling. The battle between falling production and falling demand will sustain volatility.
- US export sales through the week ending May 30 included net cancellations of 0.35 million bu of corn, new crop wheat sales of 18 million bu, and soybean sales of 19 million. The cancellation of prior corn commitments was seen as disappointing. And there simply wasn’t much activity in the corn export market last week. Light cancellations made by Central America offset similarly light demand from Japan and Mexico. Interest in US corn is limited. Newswires today carry stories that validate recent Mexican purchases of Brazilian origin corn.
- For their respective crop years to date, the US has sold 1,899 million bu of corn, down 13% from a year ago; 1,715 million bu of soybeans, down 16% from last year; and 949 million bu of wheat, up 9% from last year.
- We would also mention that official Census trade date in April featured US wheat exports of 105 million bu, a bit higher than expected. Final 2018/19 US wheat exports will likely be revised upward by 10-15 million bu. Weekly wheat shipments have been much improved since mid-spring.
- The midday Black Sea forecast maintains a hot and arid pattern across far Eastern Ukraine and Southern Russia. High pressure ridging looks to breakdown beyond the next 4-5 days, but the upper air flow thereafter does not allow meaningful rain to impact the drier areas of Russia’s winter wheat belt. Russian wheat crop estimates have been in decline, but many remain at or slightly above 80 million mt, vs. USDA’s 77 million.
- EU wheat futures are up a more modest €0.25-0.50/mt ($0.01-0.02/bu). Russian fob offers have been little changed this week despite volatility in the US. Russian wheat is still easily the cheapest milling origin in the world.
- The Canadian Prairies are in dire need of rainfall. Planting is nearly finished in Saskatchewan, yet soil moisture there is rated as 78% short/very short. The GFS forecast includes regionally better rainfall in Southern Canada, but confidence in the GFS’s N American output remains low.
- The midday GFS weather forecast is consistent with the morning forecast, and so the major forecasting models will stay in disagreement on the 6-15 day outlook. Warmth and dryness will persist into the second half of next week. The GFS then advertises the return of daily showers to NE, IA and N IL June 14-20. Cumulative totals then are projected as high as 2-5″. Climate work does suggest above normal rainfall returns, but not until beyond June 20.
- July corn nearly filled an open chart gap left at $4.04 on May 24. It is possible that this gap may be filled but this reflects strong chart-based support into late June. N Hemisphere weather remains top priority in the near term.