- Reduced volume and technical healing is the tone in Chicago at noon. Following 3 days of active fund selling in corn, the market is trying to stabilise with funds again returning to sell the overnight bounce, but in reduced volume.
- Wheat and soybeans are sagging with spreading noted in KC/ Chicago wheat futures. The ag news surrounding grain trade is limited with the results of the GASC wheat tender awaited. We look for a mixed Chicago close going home with few wanting to push their bearish luck too far. The market is taking its pulse amid a host of geopolitical factors including US/ China trade that are on the horizon.
- Chicago brokers report that funds have sold 1,600 contracts of wheat and 3,400 contracts of corn, while buying 3,200 contacts of corn. In soy products, funds are selling 1,900 contracts of soymeal while buying 1,200 soyoil. Spreading of oil/meal and KC/Chicago wheat is noted. Cash connected traders point out that cash DP corn/soy contracts (delayed price contracts) come due at the end of August.
- US weekly export sales for the week ending August 8 were mixed. The US sold 17.0 million bu of wheat (better), 14.3 million bu of corn (worse), and 26 million bu of soybeans. The corn and soybean sales include the old/new crop. China canceled over 400,000 old crop soybean sales that were shifted to new crop. China has 103 million bu of old crop soybeans left to ship and increasingly we look for at least half of these sales to be rolled forward to new crop.
- We also note that China secured 10.2 mt of US pork. The sale could have occurred right on the date that China halted purchases of US ag goods, August 2, but the demand is interesting. In the weeks ahead it will be key to monitor whether China secures additional US pork or any red meats. China pork prices are exploding to the upside with values said to be rising daily on supply shortages.
- US grain/soy sales for their respective crop years to date stand at; 362 million bu of wheat (up 56 million or 18%), 1,968 million bu of corn (down 400 million or 17%), and 1,788 million bu of soybeans (down 365 million or 17%). US soybeans are now priced $0.79/bu under Brazilian offers and US soybean demand should start to improve to non-Chinese destinations.
- The value of the Argentine Peso has improved slightly to 58:1 US$ while the Real stands at 4:1. Argentina farmers have slowed their selling of stored grains amid the currency uncertainty. The coming October Argentine Presidential election will loom large for the Peso in the weeks ahead.
- The midday GFS weather forecast is drier from the overnight run with tropical moisture reduced from the Gulf, which diminishes the rain chances for the E Midwest in the 5-10 day period. The Delta and much of the Gulf Coast has rain totals reduced by 1-2.00″ as a tropical system does not push northward. The models are struggling with Gulf tropical activity. E Midwest rainfall chances hinge on a weekend storm system that looks to produce 0.25-1.50″ across MO, IL and portions of IN. The rains would be a help to E Midwest summer row crops. A drier trend develops thereafter with the next meaningful rain chance not until the 11-15 day period. Tropical storm activity across the Gulf reduces our confidence in the forecast and attention should be paid to the 5-day forecasts.
- The markets are seeing new fund selling as spot corn futures drop below $3.60. Soybeans are leading the decline today as China secures additional Brazilian soybeans for October. KC wheat is likely forming its seasonal bottom and a higher close in corn would signify that this break has reached fundamental support. This is no place to turn bearish and we recommend awaiting US crop size clarification.