- Stats Canada will be releasing their August crop production estimates on Friday. The big question of traders/producers is how has the heat/dryness since late June impacted the spring wheat and canola crops. WASDE in their August estimate pegged the Canadian wheat crop at 32.50 million mt, which is 2.5 million larger than last year. Most private estimates have the crop at 29-30.5 million mt so a crop cut is anticipated.
- Mixed and low volume has been Chicago this morning as corn bounces, while wheat and soybean correct a portion of Wednesday’s rally. This is “get down” day and everyone is reducing their net long September positions with first notice day on Friday. There is a bullish wheat story in the offing for US/world markets, but we are still in the transition phase from a supply to demand bull market. Russia is still pumping out record wheat tonnages for export to get ahead of a strongly rumoured export tax. The message for wheat traders; positioning long on breaks for a rally into Q1 2019. We doubt that traders want to be too short of wheat ahead of Friday’s Stats Canada estimate and Monday’s Ag Ministry meeting with Russian grain exporters. We hear that the Trump Administration is getting close to announcing that the US will be able to pump E15 yearlong, but the exact timing of the “go ahead” is yet being decided.
- US weekly export sales for the week ending Aug 23 were; 15.2 million bu of wheat, 27.6 million bu of corn (old and new), and 25.8 million bu of soybeans (old/new crop). For their respective crop years to date, the US has sold 330 million bu of wheat (down 114 million), 2,384 million bu of corn (up 149 million), and 2,163 million bu of beans (down 72 million). We note that meal sales for the current marketing year were a negative 21,500 mt while new crop sales were a massive 500,000 mt. Unknown buyers showed up securing 280,000 mt of US soymeal.
- The allowing of the sale of E15 yearlong could boost US corn demand by 200-300 million bu, a help, but not a panacea of bullishness. The US corn farmer and US ethanol industry would applaud such a move, assuming it did not occur with the production of new RINs from biofuel exports.
- The Argentine Peso has continued its collapse with its trading at 40:1 or down 6 Pesos or 18% from the overnight trade. Argentine bankers are rumoured to be raising lending rates to Argentine farmers to 60-70% with some pulling their lending offers. The dramatic currency movement has caused cash grain trade to come to a halt as farmers really don’t know where the cash market is trading in Peso terms. The Brazilian Real has declined to 4.20:1 near the 2016 lows.
- ARC would remind that the USDA/WASDE will not update US wheat production estimates in its Sept 12 report. US spring and winter wheat production will be final with the September Stocks and Final US winter Seeding report in late September.
- The central US GFS weather forecast has a steady flow of rain that will be centered on the WC Midwest and the Great Lakes into Sept 12. The wet flow persists into the 10-15 day period, which could raise concern for early harvest. Flooding is likely with soils saturated from prior rains. Key will be whether the WC Midwest dries out in the last half of September. Accumulations through the 10-day period are estimated in a range of 2-5.00 plus inches. The heaviest totals will favour NE IA, MN and W WI. Temperatures stay near to above normal. Minimum lows into mid-Sep across the Northern US/Southern Canada will be in the 50’s to mid-40s. Any heat will be centered on the E Midwest with highs in the upper 80’s to mid 90’s.
- The Argentine Peso is in free fall with the Real/Ruble in tow. Inflation is raging in Turkey, Argentina and even Brazil. The Argentine grain market cannot deal with the extreme currency volatility as farmers are halting sales. If the Ruble falls fate to a sharp decline, the pressure will grow on the Russian Government to halt grain exports to slow its food inflation. Extreme currency volatility is not something world ag traders are used to. Volatile times appear to lie ahead.