- Chicago prices are recovering at midday following news that US President Trump called Chinese President Xi had a good talk this morning to confirm a face to face meeting at the G20 meeting next week. The Chinese media have confirmed the meeting. No one expects that the US/China can reach a trade pact next week, but there is hope that both sides will restart talks that avert a new round of $300 billion of US tariffs on China. Soybean futures rallied on the news amid additional fund short covering that dragged the grains off their lows. Another week of wet Central US weather is also in the background along with the number of US acres that will be enrolled in the Prevent Plant Program. Most private estimates on corn PP range from 7-9 million acres with soybeans at 2-3 million acres. Note that these are “best guesses” with next week’s USDA Final Seeding report expected to help narrow some of the PP estimates.
- We look for a mixed Chicago close with wheat to be the drag on rallies while soybeans try to hold on additional fund short covering. Since the Chicago reopen, funds are net buyers of; 7,200 contracts of beans, 6,000 contracts of corn and 3,000 contracts of wheat. In soy products, funds have bought 3,600 contracts of soyoil and 2,500 contracts of soymeal. We estimate that funds have reduced their soybean short to 21,000 contracts.
- Soyoil is catching a bid on the news that a biodiesel tax credit is going to be put up for Congressional consideration. Several Midwest Senators have pushed for the biodiesel blender’s credit to be renewed and retroactive to 2018. The news of a new congressional vote has underpinned soyoil futures this morning on the potential of adding fresh blending incentive.
- Midwest Prevent Plant enrollment guesstimates have grown amid the wet weather of last week and a forecast that stays wet for the next 5-7 days. It is unfortunate for farmers in the E Midwest that are saturated. We have raised our PP corn estimate to 7-8 million acres with 1.2-2.4 million acres of soybeans. The market normally knows seeding progress at this date, this year it really has no idea. It is the combination of yield and harvested acre risk which is likely to maintain a high level of market volatility. And final US FSA PP data will not be available until August or September. US balance sheet analysis is difficult, traders do not want to get caught buying rallies or selling breaks.
- There are two years that US soybean seeding was slower than this year, 1995 and 1996. The final yield vs trend was down 3% in 1995 and up 2% in 1996. The point is that it is too early to subtract yield basis seeding dates.
- The midday GFS weather forecast is drier than the overnight run over the next 7-8 days. Still, an abundance of rain will drop across the Midwest with 10-day totals of 2-4.00″. The rains will renew flooding across the E Midwest amid saturated soils. The heaviest rainfall looks to occur early next week with additional rain totals of 1-2.50″. A ridge of high pressure is forecast to lift the jet stream northward mid next week as it forms over the Plains and the lntermountain West. This ridge will fan upper 80′s to mid 90′s. The heat/dryness is just what Plains wheat demands as the harvest starts to gain momentum. The ridge is forecast to slowly push eastward, but it is doubtful that the ridge will lock into place.
- Chicago needed a correction, but it is too wet for any sustained break with US Prevent Plant acres unknown. US wheat is overvalued in the world marketplace and this grain holds the most downside risk ahead of an advancing harvest. Our considered view is that Chicago remains in a wide and volatile trading range. Few traders believe that the US/China will reach a trade deal, they will just keep talking.
- Chicago prices are recovering at midday following news that US President Trump called Chinese President Xi had a good talk this morning to confirm a face to face meeting at the G20 meeting next week. The Chinese media have confirmed the meeting. No one expects that the US/China can reach a trade pact next week, but there is hope that both sides will restart talks that avert a new round of $300 billion of US tariffs on China. Soybean futures rallied on the news amid additional fund short covering that dragged the grains off their lows. Another week of wet Central US weather is also in the background along with the number of US acres that will be enrolled in the Prevent Plant Program. Most private estimates on corn PP range from 7-9 million acres with soybeans at 2-3 million acres. Note that these are “best guesses” with next week’s USDA Final Seeding report expected to help narrow some of the PP estimates.
- We look for a mixed Chicago close with wheat to be the drag on rallies while soybeans try to hold on additional fund short covering. Since the Chicago reopen, funds are net buyers of; 7,200 contracts of beans, 6,000 contracts of corn and 3,000 contracts of wheat. In soy products, funds have bought 3,600 contracts of soyoil and 2,500 contracts of soymeal. We estimate that funds have reduced their soybean short to 21,000 contracts.
- Soyoil is catching a bid on the news that a biodiesel tax credit is going to be put up for Congressional consideration. Several Midwest Senators have pushed for the biodiesel blender’s credit to be renewed and retroactive to 2018. The news of a new congressional vote has underpinned soyoil futures this morning on the potential of adding fresh blending incentive.
- Midwest Prevent Plant enrollment guesstimates have grown amid the wet weather of last week and a forecast that stays wet for the next 5-7 days. It is unfortunate for farmers in the E Midwest that are saturated. We have raised our PP corn estimate to 7-8 million acres with 1.2-2.4 million acres of soybeans. The market normally knows seeding progress at this date, this year it really has no idea. It is the combination of yield and harvested acre risk which is likely to maintain a high level of market volatility. And final US FSA PP data will not be available until August or September. US balance sheet analysis is difficult, traders do not want to get caught buying rallies or selling breaks.
- There are two years that US soybean seeding was slower than this year, 1995 and 1996. The final yield vs trend was down 3% in 1995 and up 2% in 1996. The point is that it is too early to subtract yield basis seeding dates.
- The midday GFS weather forecast is drier than the overnight run over the next 7-8 days. Still, an abundance of rain will drop across the Midwest with 10-day totals of 2-4.00″. The rains will renew flooding across the E Midwest amid saturated soils. The heaviest rainfall looks to occur early next week with additional rain totals of 1-2.50″. A ridge of high pressure is forecast to lift the jet stream northward mid next week as it forms over the Plains and the lntermountain West. This ridge will fan upper 80′s to mid 90′s. The heat/dryness is just what Plains wheat demands as the harvest starts to gain momentum. The ridge is forecast to slowly push eastward, but it is doubtful that the ridge will lock into place.
- Chicago needed a correction, but it is too wet for any sustained break with US Prevent Plant acres unknown. US wheat is overvalued in the world marketplace and this grain holds the most downside risk ahead of an advancing harvest. Our considered view is that Chicago remains in a wide and volatile trading range. Few traders believe that the US/China will reach a trade deal, they will just keep talking.