- The demand bears came out in force this morning with corn posting double digit losses amid poor US weekly export sales and a new round of rain for WI/N IL and N IN. In bits and pieces, the Central US is getting water, but more will be needed and there remains some key areas that are being missed. Midwest rain chances exist into early next week which will be important to monitor. However, the area of acute concern is in decline and corn will enjoy the cooler temperatures as pollination starts in force in the last week of July and first week of August. The next chart-based support rests at $4.20 basis December, the early July lows. It will be key that corn holds this support.
- Chicago wheat futures have posted fresh July lows with this morning’s fall. The 50-day moving day average crossed at $5.06 basis Sep Chicago wheat with the next support being at the 100-day moving average at $4.86.
- Soybeans have not seen as much fund selling with the US and China holding trade talks today. The bears are concerned of positive headlines which could cause a quick bout of short covering. If China were to make new US ag purchases, they likely would be centred on US soybeans. We look for a weaker close amid the improved weather forecast for next week.
- The FAS reported that for the week ending July 11 the US sold 12.8 million bu of wheat, 13.1 million bu of corn (both crop years combined), and 12.0 million bu of soybeans (both crop years combined). The sales totals were shockingly low with combined sales of US corn, soybeans and wheat just 37.9 million bu or 1 million mt. This compares to 2.6 million mt sold last year (for the same week) or 95 million bu. The 60% decline in weekly US export sales (year-over-year) is concerning amid existing US trade disputes and the slowing world economic outlook. For their respective crop years to date, the US has sold 289 million bu of wheat (up 53 million or 22%), 1,953 million bu of corn (down 359 million or 15.5% and 1,787 million bu of soybeans (down 330 million or 15%). WASDE is likely to lower their old crop US corn export estimate another 75-100 million bu and 15-25 million bu of soybeans in the August WASDE report.
- China showed up as shipping out another 453,000 mt or 12.5 million bu of old crop US soybeans. China’s open and known US soybean commitments from the US have fallen to 5.2 million mt or 190 million bu. There were 9,900 mt of Chinese sales and 171,000 mt of unknown sales cancelled. US unknown soybean purchases are 1.68 million mt or 62 million bu. Note that Brazilian soybeans into China are cheaper than the US on a CIF basis through September. This implies there is risk of additional unknown old crop US soy sales cancellations going forward. And US new crop soybean sales are just 103 million bu of soybeans and 132 million bu of corn, some of the lowest levels in years for mid-July.
- The midday Central US GFS weather forecast is wetter across the northern half of IL and drier across IA over the next 10 days. Rains across the E Midwest will be more frequent as a ridge of high pressure builds across the western third of the US with a trough in the east. This allows for cooler Central US temperatures following a few more days of extreme heat.
- Midwest rainfall totals look to range from 0.5-1.50” over the next 10 days with the heaviest totals located across the upper Lake States. The Gulf States will also endure additional heavy rain due to a rich flow of Gulf humidity northward. A more zonal upper air flow evolves during the 11-15 day period that would offer renewed rain chances. The forecast looks for improved weather.
- The struggle of the demand bears and the supply bulls will persist into the August 12 USDA crop report. For farmers that have received rain, they are more willing to part with stored old crop grain. Few want to store into the new harvest. Look for cash basis to weaken amid tepid US export demand. Our long-term grain bias is bearish amid huge world grain supplies and slowing Chinese demand due to ASF.