- The extended range 6Z (6am GMT) GFS weather forecast model offered a cooler/wetter forecast in the 9-15 day range which produced early Chicago selling pressure. The market dropped from resistance at $4.50 December corn futures while November soybeans failed to rise above $9.00. The morning selling was not on heavy volume, but the change in the forecast indicated the sensitivity of the market to Central US weather. It is the extended range forecast that is the tail that will wag Chicago heading into Thursday’s USDA Crop report. US producers argue that this week’s heat/dryness is helpful to Midwest crops, but only if the rain chances increase next week. NASS crop condition ratings this afternoon will provide direction for Tuesday. Traders are leaning to modest condition rating increases (1-2% good/excellent) in corn/soy, but many made the same assumption last week and were disappointed. Steady ratings will be viewed as bullish. NASS crop enumerators/reporters likely are looking at the small size and delayed maturity of the crop in their US condition rating determination. Whether knee high corn on July 8 will make a good or bad yield will be determined by weather this summer and into autumn.
- Chicago brokers estimate that funds have sold 2,900 contracts of wheat, 3,100 contracts of corn, and 2,000 contracts in soybeans. In soymeal, funds are flat while buying 2,000 contracts of soyoil.
- US Weekly Export inspections for the week ending July 4 were; 27.7 million bu, 27.8 million bu of soybeans, and 22.4 million bu of wheat. For their respective crop years to date; the US has shipped out 1,671 million bu of corn (down 189 million or 10%), 1,391 million bu of soybeans (down 458 million or down 25%), and 95.2 million bu of wheat (up 31 million or 32%). China shipped out 8.9 million bu of old crop soybeans last week accounting for 32% of the weekly total. We look for WASDE to cut their 2018/19 US corn exports by 100 million bu and soybeans by 25 million bu.
- Key Russian crop watchers are reducing their wheat crop estimate based on less than perfect Russian weather and a fall in winter wheat yields. Russian wheat crop estimates range from 76.6-78.5 million mt. This compares to 78.0 million from WASDE in June. We look for WASDE to hold their Russian wheat crop estimate steady in July with annual exports at 36-37 million mt. The line up to load out Russian wheat is only half of last year, which is raising questions on world wheat demand in general.
- We doubt that WASDE will call NASS liars just two weeks after their release of the June Seeding Report and use differing seeding estimates for US corn and soybeans. Rather WASDE could lower yield, but we see a limited chance that WASDE won’t adopt the NASS June Seeding data for Thursday’s report.
- The midday Central US GFS weather forecast is broadly wetter across MN and the N Plains. Otherwise, the forecast is little different from the overnight run as the model maintains that higher heights aloft. The GFS keeps any tropical development over the Gulf and SE US. A broad ridge of high pressure will hold across the Central US and then retrograde westward to the Intermountain West in the 6-11 day period. This will allow for showers/storms to develop over the top of the ridge, sort of a “ring of fire” pattern.
- Temperatures will range from the 80’s to the lower 90’s. The forecast is favourable into July 20 with rain needed thereafter. It is worth noting that the midday forecast had more high pressure ridging over the Central US that what was offered in the 6z run.