- Chicago futures are mixed at midday with the grains weaker while soybean futures mixed with bear spreading noted. Chicago has a weak tone with easing world wheat fob values noted in the Black Sea which is pulling Chicago futures lower. The wheat market has been the market leader of the past several days. Chicago corn/soybeans continue to find support by drier than normal weather forecasts and the decline in Iowa crop conditions. Until it is clear that rain will be falling across the Midwest, the market will be unable to sustain any lasting weakness. Crops need a stabilising/finishing rain. We look for a lower Chicago close with wheat the downside leader. The drier GFS midday weather model will offer some late day support.
- Chicago brokers report that funds have sold 4,400 contracts of corn, 1,500 contracts of soybeans and 4,300 contracts of Chicago wheat. In soy products, funds have sold 2,200 contracts of soymeal and bought 3,100 contracts of soyoil.
- FAS reported that 325,000 mt of US corn was sold to China for 2020/21 delivery. This would take 2020/21 US corn sales to China to 6.0 million mt. Traders are understanding that a large 2020 US corn/soybean crop loom based on favourable weather conditions this spring and summer. A good soaking finishing rain is needed to assure 2020 above trend corn/soybean yields, but a crop disaster is not looming outside of the unfortunate wind torn areas of IA.
- Soil moisture anomaly data as of August 16 shows that acute dryness is centred on W IA and parts of OH. However, other Midwest crop areas can likely get by for now based on the coolish temperatures and existing soil moisture levels. Existing soil moisture and near to below normal temperatures will help preserve yield potential until late August rainfall arrives. The odds for rainfall in the next 5-7 days are poor.
- The well followed and respected Pro Farm Tour will survey IA on Wednesday and uncover highly variable and difficult crop assessment conditions. In fact, NASS will resurvey farmers to gauge how many will go ahead and harvest wind downed corn in their September report. We expect that some 300-600,000 acres of IA corn on the ground will be abandoned as straight-line winds reached in excess of 85 mph. The 10% drop in IA crop conditions accounts for the loss of 9-10 bushels/acre and 1.5 bushels/acre, nationally.
- The midday 10-day weather forecast is drier than the overnight run with rainfall of 0.1-0.5″ for the Midwest compared to the 0.4-1.50″ that was forecast overnight. We see the midday changes as being too dry as the models are struggling with the Gulf storminess. The extended range still has rains of 0.5-2.00″ in the 11-15 day period but confidence this far out is low. We maintain that a wetter profile is in the offing, it is just that amid a big increase in tropical storm activity, the models are going to struggle on the timing and exact rainfall details.
- Big US com/soybean harvests lie ahead in a world that is awash with wheat. Latest Russian wheat yield data projects a 2020 crop as large as 84 million mt. This big crop along with impressive yield trends in neighbouring regionswill cap Chicago rallies on limited US wheat export demand. Yet, a soaking Midwest rain is needed and the chance for such a rain are not indicated until late next week. We maintain a view of a secondary seasonal high forming this week with a decline into late September. Gulf state corn yields are running better than expected.