- Midday values are mixed as wheat values continue to push to lower lows as the US needs to compete in world trade amid a reduced demand for feedstuffs (due to the larger US corn seedings). Soybeans and corn initially followed the wheat decline with December corn futures back testing the $4.20 chart gap. Corn has bounced from key support on bottoming picking. However, Chicago corn and soybean values are capped by favourable Central US weather and the perception that US summer row crops are getting larger. We continue to hear reports that US farmers are still planting soybeans, and replanting wet spots in some E Midwest corn fields. We look for a mixed Chicago close with sagging world wheat prices likely to tug US futures lower. The veracity that corn can bounce from chart-based support will be a help in determining long term market health.
- Chicago brokers report that funds have sold 3,500 contracts of wheat and 2,900 contracts of soybeans, while buying 2,500 contracts of corn. In soy products, funds have sold 2,100 contracts of soymeal and 1,200 contracts of soyoil.
- Egypt booked one cargo of Romanian wheat for August at $196.96. Romanian wheat was the cheapest offer to Egypt’s GASC in an overnight tender. The second lowest offer was also Romanian with Ukraine in third at $198.37/mt. Speculation is rife that GASC sees weaker world wheat prices or has adequate domestic supplies nearby.
- World wheat supplies are abundant in 2019/20 with time running out for a crop shortfall as harvest operations ramp up across S Russia, the S US Plains and S Europe. Northern Hemisphere spring wheat crops still have another 2-6 weeks of key weather, but the point is that with the EU wheat crop some 14-16 million mt above last year’s drought reduced harvest and Russia looking to cut a total wheat crop of 79-82 million mt, world wheat export competition will be acute as the crop year pushes forward.
- US wheat will struggle to uncover any export demand beyond non-traditional sources. The Russian line up to export wheat during July is less than half that of last year. Either world wheat demand is starting soft, or buyers are pushing their demand backwards to Aug/September. Research does not see a US or world wheat story going forward amid record large world supplies.
- Brazilian exports of soybeans are really starting to slow which is causing exporters to become more aggressive with offers. ASF in China has harmed feed demand and China Government reserve stocks are filled. Research argues that WASDE needs to cut its 2018/19 China import estimate to 82-83 million mt against a WASDE forecast of 85.0 million to account for ASF swine demand losses.
- The midday Central US GFS weather forecast is more like the overnight EU model and much drier across the N Plains and the northern half of the Midwest. Afternoon showers/storms will be more plentiful heading into the weekend with totals of 0.25-1.00″. The rains will start across the E Midwest and shift westward on Friday and the weekend. Regular rains are expected into the middle of July. Temperatures will be above normal for the next 2 days before a cooling trend develops across the N Plains and the NW Midwest. Highs will range from the 80′s to the lower 90′s across the E Midwest for the next 10 days. There is no evidence of any extreme heat over the next 2 weeks.
- Corn is bouncing as fund liquidation slows with Dec targeting $4.30-4.40 for a short-term trading top. Unless Central US weather turns adverse, limited US export demand and the abundance of world wheat looks to keep corn range bound. The outlook for US wheat is bearish amid large supplies. Soy futures hinge on Chinese import demand with support at $8.60 November.