- HEADLINES: Soybeans sharply rally on soymeal and tight cash supplies; Ukraine corridor grain movement caps corn/wheat rally.
- Chicago rally stalls ahead of key US inflation/crop reports. Traders loath to chase rallies as fund managers are not willing to commit to new raw material length until they know more about future US Central Bank policy. Range trade to continue in Chicago until there is economic and US crop size clarity.
- Grain futures are mixed at midday with wheat lower, while corn/soybean futures hang in the green. Trade volume was active early in the day but has faltered at mid-session. Few traders want to add to their risk profile with US July inflation data to be released tomorrow and the August USDA Crop Report on Friday. It is risk adjustment that is occurring and will be ongoing into Friday.
- September corn/soy futures are firm and leading the rally on tight cash supplies and the massive (record in some cases) premiums being paid for old crop grain. Plains feedlots are becoming painfully aware that there will be a deficit year for cash corn in Kansas, and that they will have pull in corn from the W Midwest. Garden City, Kansas is bidding $1.70 over for spot corn with cash HRW wheat bid at $0.35 under. This works out to $7.87 cash corn and $8.09 cash wheat for cash trades. The extra feeding value of wheat has feeders looking at HRW as an alternative feed to corn.
- Wheat prices have fallen relative to corn to levels that will spur feedlot interest with the grain located in areas amid sky high transportation costs. It will only take another 10-15 cent fall in HRW wheat values (vs. corn) to push feedlots to secure HRW cash wheat for feed into the end of the year. Once a steer/heifer starts a wheat ration, it is preferable that it continues until slaughter. Feedlot nutritionists amid a shortage of corn are looking to alternatives. The wheat market will more closely start following corn values.
- USDA reported that China booked 133,000 mt of US corn in another sign that China will continue to secure US ag products, even amid frosty political relations due to Pelosi’s visit to Taiwan. The corn purchase was related to a private buyer that expects to be issued TRQ’s for import later this year. China is not expected to secure large tonnages of Brazilian corn amid their surging FOB price on record July loadings. China will wait to secure Brazilian corn in 2023, when their initial first crop is harvested in March/April.
- Chicago brokers report that managed money has secured 7,400 contracts of corn and 5,600 contracts of soybeans, while selling 2,100 contracts of wheat. In the products, funds have booked 3,200 contracts of soymeal and 2,400 contracts of soyoil. Managed money were active early buyers, but their demand has slowed.
- July heat was unrelenting for most of US. The month ended being the third warmest on record with record high minimum night-time lows. July was also the 55th driest on record with the dryness cantered on the western half of the US.
- Somewhat cooler conditions were noted across the Lake States in July, but it was the sweltering heat that could be the villain of yield with the warm to hot trends extending into the first week of August. The record night-time lows would most impact corn yield, something to closely monitor at harvest.
- The midday GFS weather forecast is drier for the Plains and the W Midwest for the next 8-9 days with limited rain. High temperatures soar into the 90’s to lower 100’s across the areas where dry soils prevail. The heat/dryness will further stress crops and potentially push a larger portion of the NE, KS, MO and SW IA corn and soybean crops to poor or very poor condition. The heat out west has been relentless. Several shower events will keep the E Midwest corn and soy crops well-watered. It is a yield battle between the west and the east.
- Last August NASS used a corn yield of 174.9 bushels/acre and soybeans at 50.0 bushels/acre. Such yields seem too low for today, but one may find Plains/W Midwest farmers that are pessimist on their crops. September soymeal futures are back pushing above $450/ton on tight old crop stocks and the strong premiums of $30-40/mt in the cash markets. End users and importers are hopeful for a bearish USDA August report to add to longer term purchases.