- Corn, soybean and wheat futures are lower in midday Chicago trade with December corn falling to a new contract low of $3.24. July corn futures have not scored a new contract low as cash basis strength is underpinning this market heading into first notice day on Tuesday. Funds have been aggressive sellers from the opening on favourable US weather, Covid-19 fear and a worsening economic outlook from the IMF. Chicago either needs to find new demand (China) or a dramatic change in weather to sustain a recovery. We look for a lower Chicago close with the US winter wheat harvest passing the 40% on the weekend. Wheat futures should be supported better than either corn/soybeans.
- July Chicago options expire on Friday with most farmers having to be out of any cash basis or DP contracts by Monday’s close. Selling from July options is noted with US farmers sitting on sizeable amounts of old crop corn/soybeans. US merchandisers report that farmers are waiting/wanting another few good rains before sweeping their bins clean. A pickup in cash related selling is forecast without a dramatic change in the weather forecasts looking forward into mid-July.
- Chicago traders estimate that funds have sold 12,000 contracts of corn, 8,600 contracts of soybeans while buying 2,300 contracts of wheat. In soybean products, funds have sold 2,800 contracts of soymeal while being flat in soyoil.
- The USDA Weekly Export sales report for the week ending June 18 showed 19.1 million bu of wheat, 18.2 million bu of old crop corn and 42.7 million bu of old and new crop soybeans. The wheat sales were better than expected, while corn and soybeans were a touch disappointing.
- For their respective crop year’s to date, the US has sold 251.8 million bu of wheat (down 3.5 million or 1%), 1,652 million bu of corn (down 267 million or 14%), and 1,646 million bu of soybeans (down 103 million or 6%). China booked another 4.7 million bu of US old crop soybeans and 10.7 million bu of new crop. China has now secured a known 15.8 million bu of US old crop soybeans and 125 million bu of new crop. The Chinese purchase pace of US soybeans is disappointing.
- US Sec of State Pompeo will be visiting the EU to hold a session on the transatlantic awakening to the truth of China, and its threat to the world. The session will not be seen favourably by the Chinese. We have no way of knowing as to how the planned EU/US summit will impact the Phase One Deal, but Chicago futures sold off on the announcement. The political rhetoric is likely to grow heading into the Nov 3 US election; A growing worry for the massive demand that is needed by China to fulfill its Phase One Ag Purchase pledges.
- A progressive weather pattern will be maintained across N America. Systems within a strong westerly flowing jet stream will produce showers/storms every 3-4 days. Rain totals from each system are forecast in a range of 0.35-1.25″. The next rain chance occurs from late today into the weekend with a second chance mid next week.
- The 11-15 day forecast has a moderate upper ridge across the Central US, but the ridge does not look strong enough to block moisture chances. More likely is that the ridge will produce summerlike heat with near normal rainfall. A strong upper level trough is evident across the PNW which looks to be dragged eastward by a seasonally strong jet stream.
- A longer term bearish outlook is offered in corn, but this is no place to be making new sales ahead of a key USDA crop report next week. We favour selling material rallies in corn and soybeans. The wheat market is likely in the early stages of forming a seasonal low. Kansas wheat yield data is disappointing across the western half of the state. China is on holiday into the weekend. No new corn or soybean sales were announced this morning. Hopefully, China picks up its buying next week.