- It has been a mixed session in Chicago, with row crops down slightly on the lack of near-term frost risks and with wheat higher on a weakening US$. US wheat futures on Tuesday reached deeply oversold technical levels and a bounce was due.
- The Dow has maintained a rally of 200 points at midday, with spot crude up a sizable $2.25/barrel. It is a session of raw material consolidation following recent weakness. Follow through commodity buying will be a function of whether the US and China can meet in September. Otherwise, the bet is that the trade war lingers into the 2020 US Presidential election. In other political news, the UK Parliament has blocked a no-deal Brexit, which is currently scheduled for Oct 31. The threat of a UK general election now hangs heavy in the air. This has triggered minor selling of the US$.
- Official Census US ag exports in July were near expectations. Corn shipments in July totaled 114 million bu, vs. 121 million in June. Soybean exports totaled 135 million bu, vs. 117 million the prior month.
- Using weekly FGIS data for August, calculated final 2018/19 US corn exports stand at 2,030 million bu, vs. the USDA’s 2,100 million. Final US soybean exports are pegged at 1,695 million, very close to the USDA’s 1,700 million bu forecast.
- Also of note, the value of ag imports exceeded the value of US ag exports for a third month in 2019. July’s ag trade deficit was $115 million, which follows trade deficits in April and May of $865 and $251 million, respectively. Access to export markets is what is needed in the US looking forward.
- President Trump this morning stated the Administration’s updated biofuel policy would be submitted and approved within the next two weeks. Still no details are available, but like grains and oilseeds, lasting US ethanol exports are desired as domestic US gasoline consumption will grow only slightly.
- Current futures-based ethanol production margins have rallied to $.40/gallon following the break in corn value. Spot ethanol margins in mid-August were just $0.02-0.07/gallon. The corn market is working to boost domestic consumption prior to the USDA’s Sep WASDE.
- Brokerage firm Allendale released its survey-based production estimate, with corn production pegged at 13.76 billion bu, vs. NASS’s 13.90 billion. Soybean production is estimated at 3.50 billion bu, vs. NASS’s 3.68 billion. Allendale’s corn number leans a bit negative. Yield risk is shifting to soybeans amid slowed crop growth.
- The midday GFS weather forecast is cooler in the 11-15 day period, but confidence in GFS forecast details so far out is low. The GFS advertises overnight lows very close to freezing across the far upper portions of MN and across much of Ontario Sep 17-18. Lows in the 40s are offered to ND, MN and parts of northern WI beyond Sep 15. Whether the EU ensemble models follow this temperature pattern will be watched closely this afternoon.
- Otherwise, the primary Corn Belt will stay frost-free into Sep 20. High pressure ridging expands through the balance of the week. Maximum highs on Thurs-Fri will reach into the mid/upper 80s across the Central Plains, IA and MO. The next chance for soaking rainfall occurs Sun-Thurs. Totals in excess of 1″ will favour the N Plains and NW Corn Belt. Dryness in N IA will be eased.
- The market still lacks clarity over 2019 US production potential. The world cash markets show no signs of global supply tightness.