- Corn futures pushed to new highs this morning, while wheat and soybeans follow to more modest gains. Basis in the Eastern Midwest has been rising sharply as end users scramble for forward coverage. Spreads and flat price are taking on the chore of prying supply from the producer, and there is talk that ethanol margins are profitable in the E Midwest and above breakeven at current prices. Additional rainfall of 1-3″ is due across IN and OH this weekend and early next week. Prevent plant acres in the East will likely be record large.
- Additional Midwest rain is offering support, though export sales were again disappointing. Through the week ending June 6, US exporters sold a meager 6.6 million bu of corn. Following the USDA’s downward adjustment to 2018/19 US corn exports, a weekly pace of 23 million is needed. Soybean sales totalled 9.4 million bu, vs. 18.7 million the prior week. New crop wheat sales were a pitiful 1.8 million bu.
- US corn and wheat prices are well above all other origins, and in the case of corn Gulf origin is above Black Sea feed wheat and barley.
- For their respective crop years to date, the US has sold 1,905 million bu of corn, down 14% from a year ago, and 1,724 million bu of soybeans, down 16%. 2019/20 wheat commitments rest at 226 million bu, up 36% from week 1 a year ago. New crop HRW commitments are up 158% from last year at 96 million bu. SRW sales are up 47% at 33 million. HRS sales are down 4% from last year at 52 million bu. Summer wheat demand will move towards the Black Sea and Eastern Europe. Rallies in spring wheat futures continue to struggle as the Canadian Prairie weather forecast turns somewhat wetter moving forward. World cash wheat markets are down on last week.
- Exporters sold 175,000 mt of 2019/20 corn to Mexico this morning. However, new crop soy export commitments sit at just 66 million bu, vs. 244 million a year ago and the lowest since 2005.
- US and world energy markets are higher this morning following an attack on a tanker in the Gulf of Oman. Ethanol futures hit new rally highs, though forward ethanol futures are priced at modest premiums to gasoline. Summer ethanol grind will be robust, but it is new crop where there is concern.
- The Black Sea weather forecast continues to trend wetter in Ukraine and Central Russia. Coming rain will be too late to materially benefit winter wheat but will be timely for corn crops there. Russia’s forecast is also cooler than prior runs. Highs will be capped at the mid/upper 80s. Otherwise it is all weather, particularly in IL, IN and OH. A more favourable mix of rain/sun is projected elsewhere, but E Corn Belt crop ratings will stay well below recent years in the coming weeks.
- The midday GFS weather forecast is little changed into late next week but is much drier beyond June 22. The jet stream will be allowed to shift north in late June as high-pressure ridging expands aloft the Southern Plains and Southern Midwest. This pattern will be needed. In the near term, 5-day precipitation totals are still pegged at 1-3″ across IL, IN’ OH and MI. The drier extended range forecast needs to verify, but a more seasonal pattern is projected thereafter. The midday GFS forecast is in much better alignment with its EU and Canadian counterparts.
- Corn needs to close above prior highs to maintain fund buying. Whether the highs are in will be a function of crop ratings in the next 2-3 weeks.