- Overnight losses have been extended after digesting worsening rhetoric regarding US-world trade, and ahead of this evening’s crop progress report. Ratings tend to decline seasonally beyond mid-June, but following recent widespread precipitation and cooler temperatures, declines in good/excellent condition in the next 1-2 weeks will be limited to 1-2%. Crop condition-based yield models will maintain record yield potential into the opening week of July. We would note that July weather’s impact on corn yields rises exponentially, but so far so good.
- Exporters this morning sold 186,000 mt of old crop beans to an unknown destination. Gulf beans today are offered at a $32/mt discount to S American origin for immediate arrival. S America’s premium has widened $7/mt in just the last week. It is also likely that Gulf HRW will be offered this evening just $15-18/mt over comparable EU origin, vs. $40/mt two weeks ago.
- The trade’s average guess on corn acreage in Friday’s report rests at 88.5 million, up 500,000 from March. Bean acres are estimated at 89.7, up 700,000. All wheat acres are put at 47.1 million, down 200,000 from USDA’s current estimate. We see no reason, neither price nor weather, why the acreage matrix will change much. Reports from the Central US indicate very few changes from intentions occurred.
- Grain movement in Brazil remains slow. Following last month’s trucker strike, freight costs have surged. The government recently imposed a nation-wide minimum freight price, but this does not account for differences in regional supply and demand, and has not worked to satisfy the industry. The government’s minimum freight price has since moved to the country’s Supreme Court, which should issue a ruling on its validity in the next few days. This has exacerbated the rise in Brazilian soy/corn basis.
- The Black Sea weather forecast at midday features better rain chances across the far northern edge of Russia’s corn belt, and far western edge of Ukraine. We put coverage at 30-35% of the total Black Sea corn producing areas. This is welcomed, but a bulk of the region will stay dry.
- On Friday Russia’s Ag Ministry pegged Russia’s total grain crop (including minor grains and pulses) at 100 million mt. We calculate the USDA’s total Russian grain crop forecast at 110 million mt. Cuts to Russian spring crop production lie ahead without normal rainfall by mid-July. The central US midday GFS weather forecast is slightly wetter in the Central Midwest in the 11-15 day period. The overall pattern is still drier and warmer beginning mid-week. High pressure aloft expands, but the GFS forecasts a more transitory ridge, which moves into the southwestern US July 8-9. If realised, this will allow for near normal precipitation across the heart of the Corn Belt. In the meantime, active rain continues in the next 48 hours. Precipitation will be lacking June 29-Jul 7. Above normal temperatures will be widespread.
- Trade issues continue to dominate. Better wheat harvest weather and ongoing lofty US crop ratings are also noted. We are hopeful recent trade rhetoric is being used to spark negotiations with China prior to July 6.