- HEADLINES: Chicago sags on risk adjustment ahead of Tuesday’s USDA report; Pakistan secures world wheat; Canada stocks in the afternoon; GFS weather forecast stays dry for Central US.
- Chicago futures are mixed at midday with corn/wheat steady to firm while the soy complex sags. It is all about position squaring into next week Tuesday’s USDA Crop Report and the uncertainty that surrounds US corn/soybean yields. Funds are long of soybeans/soy products and short of grain, which is why the grains are holding while liquidation pressures the complex. We note that cash markets in soyoil are firming on basis while processors are anxious for new crop soybean supplies. The drop in soyoil has taken the market back to key support on the weekly continuation chart against $0.64 spot futures. We look for a mixed close with a rally to end the week ahead of Monday’s weekly crop progress and condition report. We are looking for another 2-3% fall in soy/corn good/excellent ratings as heat/dryness rapidly pushed crop maturity. Central US weather becomes less important to price unless the pattern were to change to excessive wet to delay the Midwest harvest or if a hurricane is pointed at the US Gulf.
- Chicago brokers estimate that funds have sold 5,600 contracts of soybeans, 6,700 contracts of soyoil, and 3,200 contracts of soymeal. In the grains, managed money is flat in wheat while buying 2,300 contracts of corn.
- China has booked 6-8 US soybean cargoes for November on the morning Chicago price break. China continues to import record tonnages of world soybeans with 2022/23 imports to reach 103-104 million mt. China shows no slowdown in purchasing US soybeans, but there is an export tail from Brazil that will cut into September shipments.
- USDA/FAS will release their weekly export sales report on Friday due to the US holiday on Monday. Large US corn and soybean sales are expected.
- Pakistan is showing renewed import interest for world wheat. We hear that Pakistan has purchased 4-6 cargoes of Russian and Romanian wheat. A year ago, Pakistan imported 3.00 million mt of world wheat, just below the record of 3.6 million imported in 2020/21. Export sources expect that Pakistan will import 3.0-3.5 million mt this year (vs USDA estimate of 2.0 million) due to surging rice values and a poor wheat harvest.
- Canada will release their July 31 grain and oilseed stocks totals tomorrow morning. It is expected that Canada will raise wheat stocks from prior forecasts. However, this year’s drought plagued grain harvest and ongoing active weekly exports of 300-500,000 mt of wheat will lower stocks in 2023/24. Canadian durum and spring wheat export demand to date has been active.
- Monthly Ukraine Grain exports are estimated at 2.1-2.4 million mt as marine trade out of the Black Sea is blocked by Russia’s ending of the Grain Export Corridor pact. This is half of last year’s export pace, and it will force key importers like China/North Africa to seek their corn/wheat elsewhere.
- US ethanol production produced 298 million gallons vs 296 million last week. There was a push of US ethanol production in the last 6 weeks that raised the total corn grind near the WASDE annual estimate. We would look for only a modest downward adjustment on the 2022/23 US ethanol corn grind of 5-10 million bu next Tuesday.
- The midday GFS weather forecast is consistent with its own prior weather run and others. Another 10-14 days of below normal rainfall and seasonal temperatures are forecast for the Midwest and Delta. Rain is forecast to drop across the Southern and Central Plains early next week. The rain comes too late to aid corn/soy yield prospects, but it will aid the HRW wheat seeding. Note that Midwest farmers are waiting for rain before beginning their SRW wheat seeding campaign. High temperatures range from the 70’s to the mid 80’s with hurricane Lee to hold offshore the NE US but produce considerable rain of 2-4.00” for W New York and Maine.
- Chicago volume has been low as traders adjust their risk for Tuesday’s USDA Crop report. Private Crop estimates were not surprising this week and clustered around 175 bushels/acre in corn and 50 bushels/acre in soybeans. Early corn yield reports are disappointing, but producers hope that yield improves in the coming weeks. We see soyoil, soybeans and wheat as undervalued amid expanding demand and tightening supplies. This is no time to fall asleep at the wheel!