- Chicago markets have traded mostly firmer to start the week in moderate volumes as traders eye up Thursday’s USDA report. Early higher prices were tempered on discussions over potential for improved corn and soybean crop ratings later today. Many are expecting (hoping?) for a 1-2% increase in soybean ratings and a 1% improvement in corn. We maintain our view that change, if any, will be towards lower ratings as the Iowa crop hit a wall in terms of short soil moisture. Producers report that IA corn is tipping and that soybeans look good from the roadway, but just aren’t growing and producing a canopy. Iowa’s need for rain is immediate and although cool temps are helping, the soil moisture shortage is causing a more rapid maturation rate.
- Note that world wheat prices are steady to firm to start the week and have been slow to follow the US futures decline. Russia is harvesting a record large wheat crop of 74-75 million mt, but Russia’s problem is not the size of their harvest, but that their logistics will prevent them from exporting more than 28-30 million mt of wheat, similar to last year. Consequently, the world will likely find that 40 million mt of reduced world exporter wheat supplies will translate into steady to better US wheat export demand.
- In summary, reports from the fields show huge yield variability in corn and historically short soybean plants. The midday weather foreacst is too dry for the heart of the Midwest. Iowa crops are hitting a wall in terms of soil moisture and the need for rain is now immediate. Soybeans are just too cheap relative to their fundamentals and declining stocks.