- The morning has been mixed in Chicago, with row crops higher and wheat finding new multi-week lows. Newswires have been much more active this morning, with weekly US energy data, Canadian stocks, Informa yield updates, and ongoing uncertainty over Russian grain shipments being digested. Russia’s Ag Minister has again been quoted suggesting there are no plans to impose any tax on wheat exports. The headline has triggered additional fund liquidation, and we do mention that managed funds in Chicago wheat as of this morning were long an estimated net 47-50,000 contracts. Sources say the missing qualifier is the word “yet” and it’s been discussed in recent weeks that Russia’s Ag Min will monitor wheat supplies and exports on a weekly basis. We urge caution against reading too much into Russian policy, which is still very fluid.
- EU milling wheat futures in Paris settled €1.25-1.50/mt lower ($0.04-0.05/bu). Gulf HRW’s discount to German and Baltic origin is widening.
- Informa pegs US corn yield at 178.8 bushels/acre, vs. 176.0 last month. Informa’s production estimate this morning rests 35 million bu above USDA’s. Informa pegs soybean yield at 52.9 bu/acre, vs. 50 last month. Informa’s US soybean production estimate is 112 million bu above USDA’s. We agree that US soy yield will inch towards 52-53 bushels/acre, and the issue is still the lack of export demand growth barring a resolution between the US and China. In corn, we maintain that 176-178 is the most probable range. Excessive rainfall in the Central and Eastern Midwest through the weekend needs close watching. Stats Canada’s major crop ending stocks report is a dud, statistically. All wheat end stocks are pegged at 6.2 million mt, vs. USDA’s 6.0. Canola end stocks are put at 2.4 million mt, vs. USDA’s 2.6. Combined stocks of wheat, canola, barley and oats is pegged at 10.6 million mt, just 200,000 mt above USDA’s estimate.
- US ethanol production through last Friday totaled 320 million gallons, up 5 million on the week and a bit larger than expected. Ethanol stocks fell 15 million gallons on the week. And US stocks fell 4.3 million barrels to new 3½-year lows. WTI crude is down $1.40/barrel at midday despite the drawdown. Concern over emerging market growth is apparent.
- The central US GFS weather forecast at midday is wetter in the Delta but otherwise little changed. Slow moving rains will work across the Central and Eastern Midwest into late Monday. The heaviest totals, 3-6”, will favour Central IL, IN, OH and portions of KY. Light but rather steady rain persist across the Delta/Southeast into early next week. Fortunately, drier weather evolves as expansive high pressure returns next week. Temperatures in the 6-10 day period will be 6-20 degrees above normal.
- It is clear the wheat market awaits better US export demand, or actual government intervention in Russia, before a lasting rally unfolds. But work suggests that once Russian exports are exhausted (with or without policy change), massive world import demand finds the US. Gulf wheat already is offered $10/mt below European origin and some $50/mt below Australian.