- Low volume and mixed has been the signature of Chicago trade to end the week. Soybeans and corn have held in the green, while the wheat market is slightly lower following the weaker price trend evident in French wheat futures. Fresh news is lacking and with the summer row crop harvest dead ahead, few desire to add to their market risk ahead of the weekend. The weekly Commitment of Traders report is out after the close and traders are looking for the data to confirm that funds have cut their net long wheat position by 10-15,000 contracts, while adding to market shorts in corn and soybeans, and soyoil. The data and coming first notice day against September futures will keynote next week’s trade. Chicago brokers estimate that funds have bought 4,300 contracts of corn and 2,200 contracts of soybeans, while selling 1,900 contracts of wheat. September Chicago options expire today with few market fireworks expected.
- We note that two US soybean vessels are loading for China this week. The importer is said to be Sinograin and they are testing to see if CIQ will allow US soybeans to enter China. US monthly soybean exports have been record large since April, a trend that should persist during August. Large weekly soybean shipment data is expected on Monday.
- Pro Farmer will be releasing their US corn yield estimate at 1:30pm today.
- The US/China trade war is set to escalate after each side failed to score real progress after two days of talks. The Chinese are likely to wait until the November election to gauge how to push real trade progress. This means that 25% tariffs will be invoked on $200 billion bu goods of Chinese goods after Sept 6. China is expected to retaliate on US goods and its business practices.
- Russia will be surveying various sectors of their ag industries in the next few weeks to help the ag ministry decide on whether they should slow or shut down its wheat exports. It is calculated that Russia will have exported a record 8 million mt of wheat in July/August amid the EU crop shortfall. Russian livestock producers are lobbying strongly for a ban due to rapidly rising feed costs. The Russian livestock industry wields a big stick in politics, and most cash grain traders are not offering Russian fob wheat beyond October.
- The central US GFS weather forecast is similar to the overnight run as a series of storms are expected to impact MN/WI/IA/IL and MI. Cumulative rain will range from 1.25-4.50” with some localised totals exceeding 5.00” into Sept 3. The rain will accentuate flooding across Central WI and S MN. The wet weather could produce stalk rot in corn. Above normal temperatures will persist with highs ranging from the 80’s to the lower 90’s. Any real heat will be located over the Midwest and the S Plains. US crop maturity will be pushed amid the above normal warmth. There is no evidence of any cold air for the NC US that would pose a threat to crops. Regional flooding is the big risk for crops in coming weeks.
- There is not much interest in new positions as harvest looms and traders are trying to gauge the building of US export demand. Argentina is offering fob corn below the US through September, but October offers are becoming scarce. Surprisingly, US soybean export demand is record large (without China), but this trend can’t continue beyond September. Chicago is in the transition from a supply bull which peaked just before the August crop report to a demand led bull which is coming.
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