- Chicago futures are red at midday with Minneapolis wheat holding near steady. It appears that Central US weather is directing price direction with needed rain to fall across the Midwest/Central Plains/Delta later this week (and into early July). An early sharp decline in the US stock market offered a bearish tailwind. But that changed at midday. As the US stock market has bounced near steady, it has offered a respite for the grains. We look for a mostly lower Chicago close with N American weather offering direction into the weekend.
- FAS announced the sale of 390,000 mt of US soybeans to China for the 2020/21 crop year. The sales were reported to made late last week. We calculate that China has now taken 4.5 million mt of US soybeans including half of what the US has sold to unknown destinations.
- Chicago brokers estimate that funds have sold 3,200 contracts of corn, 2,700 contracts of soybeans, and 1,900 contracts of wheat. In soy products, funds have sold 2,000 contracts of soymeal while buying 1,800 contracts of soyoil. We note that corn has pushed below last week’s low at $3.40.
- US weekly export inspections for the week ending June 11 were; 3 5. 8 million bu of corn, 13.8 million bu of soybeans, and 16.3 million bu of wheat. The soybean and wheat export numbers were on the lower end of trade expectations.
- For their respective crop years to date, the US has shipped out 24 million bu of wheat (down 6 million or 19%), 1,203 million bu of corn (down 405 million or 25%), and 1,326 million bu of soybeans (down 17 million or 2%). China shipped out just 1.8 million bu of US soybeans last week. Brazil last week exported 3.5 million mt of soybeans or a record for the week at 128 million bu. The Brazilian soybean export pace continues to be huge. This will maintain a slower than desired US soybean export pace into August.
- The European weather model will be updated with a new version due on July 1 to improve its forecasting ability. It has been years since a new version of the Euro weather model has been available. We note that the new prototype of the model is running, and it has more rain for the Midwest than the current European weather model forecast.
- NOPA estimated its May soybean crush rate at 169.5 million bu which fell below trade expectations on slowing domestic meal demand. In April, NOPA crushed 171 million bu with last year’s total at 154.8 million bu. They had anticipated that NOPA would release a crush estimate of 173 million bu. Soyoil stocks fell to 1,880 million pounds vs expectations of 2,065 million pounds, which was deemed as bullish.
- The Brazilian Real has fallen to sharp losses at 5.20:1 based on the expectation that the Brazil Central Bank will cut its lending rate by another 0.75% to a record low 2.25% this week. A year ago, this lending rate was over 12% suggesting that there is little return to investors amid the high stakes of the Brazilian economy with a worsening Covid-19 infection rate.
- The midday GFS weather model is staying with a wet/coolish pattern for the Central US with any high pressure ridging over the NW US in into the closing days of June. This creates a NW upper air flow with a strong NW flowing Jet Stream producing showers/storms on a regular basis. Midwest 10 day rainfall totals are forecast to range from 1-3.” with coverage estimated at 75-80%. There is no sign of pattern stagnation or lasting extreme heat. The Plains will stay hot this week before moderation on the weekend. The forecast aids crops.
- Chicago values will watch Midwest weather with improved rain/seasonal temperatures forecast for the Midwest into the end of June. This will cap any bounce with a close below $3.39 Dec corn turning trends downward again.