- Chicago values are mixed at midday with soybean futures sagging while the grain markets bounce. The volume of trade is diminished from recent days with spreading the key morning feature. Traders have been unwinding long soybean vs corn and long soybean vs wheat spreads. We anticipate a mixed Chicago close with December corn trying to hold $3.20 support while funds are watching to see if Nov soybeans close below $8.83 50-day moving average. Chicago price trends are down amid the pending large US crops and the coming harvest. The market has a soft tone at midday with selling likely to return at the close.
- Chicago brokers estimate that funds have bought 2,100 contracts of wheat and 1,900 contracts of corn, while selling 3,200 contracts of soybeans. In soy products, funds have sold 1,800 contracts meal and 2,500 contracts of soyoil. The fund long liquidation is expected to increase if Nov soybeans close be low $8.80, last week’s low.
- FAS announced 192,000 mt of soybeans to China for 2020/21. This was the first US sale to China in the past 5 business days. There was an unknown sale on Monday that likely was made to an EU buyer.
- IHS Markit (lnforma) estimated the US 2020 corn yield at 179.0 bushels/acre and the soybean yield at 52.5 bushels/acre for a US soybean crop of 4,355 million bu. The US all wheat yield was forecast at 50.2 bushels/acre, up slightly from the NASS estimate of July. The US all wheat crop was forecast at 1,843 million bu. We would remind that HIS is trying to forecast what the USDA will report next week, not what the final US yield will be (like StoneX). We also argue that the NASS farmer survey will be more conservative that yesterday’s StoneX estimate.
- US weekly ethanol production amounted to 274 million gallons, below the 285 million gallon weekly average needed to reach the USDA annual forecast of 4,850 million bu. Research maintains that WASDE will cut its US 2019/20 corn grind estimate by 25 million bu next Wednesday. It is likely that a further reduction of 10-15 million bu may be required by the final count by the end of August. US ethanol stocks are historically low, but the seasonal driving season is ending.
- The midday GFS’s forecast details are slightly drier in SE IA, but wetter for the E Midwest and Missouri over the next 10 days. Should the forecast verify, moisture deficits will persist in IA while positive moisture anomalies stay intact elsewhere. Overall, the Central US pattern will feature mild temperatures into the weekend. A warmer/wetter pattern follows. Weak high-pressure ridging will reach into the S Plains with a broad trough/ridge pattern forecast thereafter into Aug 18. Daily rain chances will impact the N Plains and Midwest Aug 10-25. Cumulative totals in excess of 1″ will favour SD, WI, MO, IL and IN. Temperatures warm beyond the weekend.
- The grains are bouncing on long soybean/short grain spread unwinding. Chicago downtrends remain intact. We doubt that funds will ease up on soy/corn selling heading into next week’s USDA Crop report. Some 10-15% of the Midwest is dry, but other areas are well watered/improving which is more than making up for any yield loss in C IA. Some rain dropped across W IA overnight, but much more is needed. The forecast models have trouble in forecasting convective rain totals into mid-August. Starting Friday, the Midwest has a daily chance of rain into August 16 which should help crop ratings.