- Dull/listless is the midday Chicago trade as an early rally effort failed to garner any buying interest. End users see no reason to chase rallies while speculators appear comfortable with their existing market positions. All eyes are on Central US and European/Black Sea weather as spring seeding is wrapping up.
- Chicago traders are closely watching weather forecasts to gauge 2020 crop yield potential. We look for a mixed close with both the bulls and bears showing frustration with range bound markets.
- Chicago brokers estimate that funds have bought 3,200 contracts of corn and 4,800 contracts of soyoil, while selling 1,200 contracts of Chicago wheat and 900 contracts of soybeans. Funds are flat in soymeal. Interest in new positions is relatively low in midday activity.
- China is said to have purchased 10-14 cargoes of Brazilian soybeans for Sept/October, and even 1 cargo for November. The purchases are surprising US exporters as Brazil appears to have more soybean supply available than expected. China is bidding for additional Brazilian cargoes this morning which indicates either than Brazil’s 2020 soy crop is understated or that Brazil’s soy crush rate is sharply lower to due Covid-19 reduced soymeal demand.
- It was expected that the US would be able to garner Chinese demand from late August into early 2021. The US will still dominate China’s purchases in this timeslot, but totals will be cut from prior expectations. Even with Brazilian soybeans being more expensive this autumn, China is securing this origin via what they see as the political risk in US soybean/grain sales.
- There has been considerable discussion on 2020 US corn seeding totals (like last year) with North Dakota just 54% planted through Sunday. Research would argue that farmers will continue to seed a few days after their PP insurance date (May 25) such that 65% of the North Dakota corn crop will be seeded at the end of this week.
- NASS indicated that 3.2 million North Dakota acres were intended to be planted to corn in March, thus 800,000-1.1 million acres could be enrolled in the Prevent Plant program. Yet, we all know that you cannot deduct one states PP acres from the US March Intentions to forecast the June Final US corn seeding total.
- We would hold to a 2020 US corn seeding estimate of 96.0 million acres based on some western US states seeding more corn via favourable weather while others such as ND, IL and PA placing acres in the PP corn program. Historically, the US has some 2.5-4.5 million acres enrolled in PP each year.
- EIA will be out with their weekly ethanol report on Thursday due to Monday’s US Government holiday. Moreover, the US weekly export sales report will be pushed back to Friday. Argentine FOB corn for June/July is offered $0.32-0.34/bu below the US Gulf which is impacting the current and future US corn sales pace.
- The midday US GFS weather forecast model is struggling with an early seasonal tropical storm that it is forecast to develop in the Gulf around June 7. The models are very erratic with the storm’s positioning and impact on the flow of Gulf humidity northward. Confidence in the US GFS forecast beyond the next 7 days is low. We suspect that the GFS is under forecasting rain for the Western Midwest amid “ring of fire” rains that start this weekend. The next 48 hours will produce scattered showers across the E Midwest including a portion of Eastern IA. Rain totals are estimated in a range of 0.15-1.00″ with coverage of the area pegged at 65%. Warm/dry weather follows with rains noted on the weekend across the NW Midwest as warm air builds northward. A tropical system is forecast to make landfall over NOLA on June 12. This is way too far out for any confidence.
- Soaring palmoil futures is supporting gains in Chicago soyoil. US/China tensions are likely to worsen into the weekend as China’s Parliament passes the National Security Law which will spark US sanctions. Advice is not to chase Chicago rallies. E Midwest farmers report that the recent heat is aiding corn/soy crops.