- Midday values are mixed with soybeans firmer, wheat lower and corn caught in between. Chicago appears to be trading technicals (charts) with fresh fundamental news lacking ahead of a pending long US 3-day weekend. Funds have been sellers of wheat/corn while securing modest amounts of soybeans/soyoil.
- The volume of trade is diminishing at midday. Research suggests that US and EU wheat prices are getting close to scoring their seasonal lows (early). KC July wheat futures circa $4.40 will be testing a weekly uptrend line that extends back to 2016. We expect that this support will hold amid the ongoing dryness that is trimming supplies in Europe and the Black Sea. A mixed Chicago close is forecast with traders positioning into the close looking for a turnaround on Tuesday.
- Chicago brokers report that funds have sold 3,200 contracts of wheat, 2,600 contracts of corn, while buying 2,400 contracts of soybeans. In soy products, funds have bought 3,200 contracts of soyoil while selling 1,900 contracts of soymeal. The fund’s buying of soybeans/soyoil has slowed from opening levels.
- US export inspections for the week ending May 14 were; 45.3 million bu of corn, 12.9 million bu of soybeans, and 16.2 million bu of US wheat. The corn inspections were better than expected while China shipped out 2.6 million bu of US soybeans.
- For their respective crop years to date, the US has shipped 1,032 million bu of corn (down 443 million or 30%), 877 million bu of wheat (up 8 million or 1%), and 1,277 million bu of soybeans (up 57 million or 4.5%). We believe that US 2019/20 soybean exports will be cut another 25-75 million bu in the June WASDE report. We cannot statistically argue with the WASDE old crop wheat and corn export estimates.
- World exporter wheat stocks are declining via ongoing dry weather. Private estimates for the European all wheat crop have declined to 139-141 mt vs 155 million last year (including durum). With another 2 weeks of dry weather, EU exporters report that EU wheat production could drop below the 2018 harvest at 135 million mt. This looks to severely reduce EU wheat exports at a time with growing North African demand due to their own dryness issue from January through March. French wheat futures fell on lacklustre end user demand, but the crop outlook for EU wheat is becoming a concern with the crop either in the heading or just entering the heading stage of production.
- And, sporadic rain across the Black Sea and developing drought for Siberia look to trim the Russian/Ukraine wheat crops. Crop concern is growing which could produce an early seasonal low with Russian flour prices at record highs.
- The developing loss of EU/Black wheat crops is likely to produce an early seasonal fob low with US wheat crop quality becoming important to world importers. The US has a developing export opportunity of the EU/Black Sea continues with its arid weather profile into June.
- The midday GFS’s US weather forecast is like its overnight solution which raises confidence in its correctness. Soaking rain will be positioned from the Central Plains into the SE US later this week. Showers will dot the Northern Plains next week. Thankfully, the Central IL forecast is drier which will aid the drying and reseeding effort. Temperatures warm from west to east with highs by Thursday ranging from the 70′s to the mid 80′s. The warmer temperature profile aids seed emergence.
- Fund selling and sagging world wheat prices ($194/mt ex the Black Sea) is keeping pressure on Chicago wheat. A seasonal low is forecast to develop with fresh downside price risk limited to 3-7 cents. China did not show up as a buyer of US soybeans over the weekend, but moderate interest is noted today. This is no place to be selling wheat or soybeans. We would look to sell corn on rallies as US new crop supplies will overwhelm.