- Chicago ag markets are mixed at midday on Monday. Wheat futures traded lower following the forecast for rain across Argentina and reports that frost did not produce much damage to developing E Australian or S Brazilian wheat crops.
- The weakness in US wheat futures pulled corn off its high, but few traders want to be short fearing a sharp fall in weekly good/excellent condition ratings following the pure lack of rain since August 8.
- Late July and August was wet across most Midwest areas (excluding W IA), but the rains have since missed the Midwest causing acute net drying. 90% of the US corn crop should be in dough with 40% reaching dent which will help limit its yield loss, but the adverse yield impact on soybeans could be greater without rain late this week. The need for rain is immediate.
- We look for a mixed Chicago close with crop condition ratings expected to fall sharply. Then, it is the amount/location of rainfall which will then direct Chicago prices into the end of the week.
- The midday GFS forecast has the rains further south and west than was indicated in the overnight run leaving IA/WC IL with limited totals. This would be harmful to US corn/soybean yield potential into early September.
- Chicago brokers estimate that funds have sold 4,300 contracts of wheat, while being flat in soybeans (overnight buyers and morning sellers), while securing 7,400 contracts of corn. In the products, funds have bought 3,200 contracts of soyoil while selling 1,200 contracts of soymeal. Funds are exiting net corn short.
- US export inspections for the week ending August 20 were; 35.1 million bu of US corn, 42.2 million bu of soybeans, and 20.9 million bu of wheat. The soybean and wheat inspection totals were better than expected and considered supportive.
- Wheat weather forecasts have improved with some needed rain for Argentina this week while weekend cold weather threats for Brazil/E Australian produced limited damage on the weekend. The world has a supply abundance of wheat which has pressured the spot Chicago wheat/corn spread to a $1.87/bu wheat premium. The KC wheat/corn spread has narrowed to $1.02/bu which amid discounted cash basis, could cause Plains wheat feeding. Stats Canada will be out early next week with their August crop forecasts.
- It is being rumoured that China booked 4-6 cargoes of US soybeans this morning shortly after the Chicago opening for November shipment. No new sales of US corn, wheat or soybeans were announced this morning.
- The midday GFS forecast is wetter across the E Midwest but drier across the E Plains and W Midwest. The areas that really need the rain would have to wait until early September for moisture to fall.
- Note that soon to be Hurricane Laura looks to make landfall slightly farther east, but this all depends on the forward movement of the storm after it exits Cuba with warm Gulf waters to promote rapid intensification. If the storm is slower, it will be stronger and further west. The afternoon run of the EU model should help in the landfall determination. Until Thursday, mostly hot/ dry weather will prevail across the Midwest that is rushing crop maturity.
- Traders are looking for a 2-4% fall in US corn/soybean good/excellent ratings as crops just run out of soil moisture in IA, W IL and portions of OH. Talk that China booked another 4-6 cargoes of US soybeans this morning is helping underpin the complex, but a Chicago corn/soy break will not be sustained until some needed rain falls. This is not the finish that farmers desired as dry weather steals bushels and enhances S American soybean seeding that starts in mid-September. Rain is needed immediately.