- Ag markets are steady to lower at midday as cool Central US temperatures battle against falling world cash grain markets. Major exporting currencies are down sharply today, with the Argentine Peso at 56:1 and the Brazilian Real at 4.19:1, a level not seen since the middle of 2018. Brazil continues to struggle with its Federal Pension reform and a flood of dollars leaving the country. China’s Yuan also fell to a new 10-year low, and is now down 14% from the spring of 2018, prior to the beginning of the US-China trade war. Weakness in S American currencies is keeping corn fob offers there depressed.
- Concern over cool Plains/Great Lakes temperatures, and a lack needed GDD (growing degree days) accumulation, will persist until confirmation of a warmer temperature profile is available. Low pressure will be anchored aloft Southeastern Canada into late week. Morning lows across the Dakotas Thurs-Fri morning will drop into the mid/upper 40s. However, the upper air pattern next week is void of any major frost/freeze threat.
- Actual premium won’t be added until lows below 35 are included in near term operational model output. The market will view frost/freeze events as binary, either the growing season ends prematurely, or it doesn’t.
- Argentine cash corn basis is down slightly this week, with spot fob offers now the lowest since the middle part of 2017 at $144/mt. US Gulf corn for September shipment is quoted at $163/mt. Steep discounts to US origin are present in S America and the Black Sea into the very end of 2019. Weak world corn prices are signaling an abundance of supply in exportable positions.
- Egypt this morning was offered a sizeable 760,000mt of EU and Black Sea wheat. The cheapest offer made was French origin at $194/mt. Russian wheat follows at $200 /mt, which is comparable to $3.99, December KC, on a fob basis. However, when adding freight, US wheat remains non-competitive into North Africa and the mid-East. We note that Egypt’s last wheat purchase on Aug 15 was executed at $201/mt, basis fob. Today’s purchase price will be roughly $199-200/mt. The world wheat market remains flat.
- Yet, we would mention that European wheat futures are bottoming (in our opinion) right on schedule ahead of the September delivery period. It is just tough to be overly bearish grain prices at current values, with Dec corn at $3.60-3.70 having digested potential 2019/20 US end stocks of 1.9-2.2 billion bu.
- Chinese crush margins are rising on rising domestic soymeal values.
- The midday GFS weather forecast is drier than the morning run across the Plains and Midwest over the next 10 days. Following heavy rainfall in mid-August, multiple days of sunshine will be helpful. Warmer temperatures are desired, but frost/freeze remains absent into Sep 10.
- A rather variable temperature pattern lies ahead. Warmer temperatures evolve next week as strong high pressure aloft is re-established across the Plains and Southern Midwest. High temperatures next Tues-Sat will reach into the 70s and 80s. A second blast of cooler air occurs Sep 8-9, but low readings in the upper 30s and 40s will stay isolated to northern MN and southern Canada.
- Neither the bulls nor bears will hold much leverage into the Sep Crop report, or more likely until the Midwest harvest begins.