- HEADLINES: Chicago recovers with wheat/soybeans the upside leader; CONAB cuts Brazilian corn crop to 86.6 million mt, down 6.5 million from July.
- The morning Chicago trade has been mixed with soybeans/wheat rallying while the spreading of wheat/corn and soybean/corn has kept corn under pressure. The volume of Chicago trade is picking up from recent days as traders’ position for Thursday’s August USDA report. Few are willing to add to risk, but end users are hopeful for a bearish USDA report as they want (need) to book forward amid tightening world grain supplies. The USDA report will likely offer bullish world grain data (Brazilian corn/Russian wheat/Canadian drought) with the big unknown being US corn/soybean yields. The whisper estimate today is that US corn/soy yields are not too far from trend. Traders are betting that US farmers like their corn/soybean yield prospect outside of the Dakotas and Minnesota.
- Chicago brokers estimate that managed money has bought 5,300 contracts of wheat, 2,900 contracts of soybeans, while selling 1,400 contracts of corn. In soy products, funds have bought 3,200 contracts of soyoil while selling 1,200 contracts of soymeal.
- CONAB lowered their estimate of the 2021 total Brazilian corn crop of 86.6 million mt, down 6.75 million from their forecast of July. Private Brazilian analytical firms gauge the 2021 total Brazilian corn crop at 81-83 million mt, with one firm as low as 77 million. USDA has been following CONAB estimates closely since April, and a cut of 7 million mt of Brazilian corn production would be important for 2021/22 US corn exports. It is October when the USDA should be close with the final 2021 Brazilian corn corp. CONAB forecast the 2021 Brazilian soybean crop at 135.9 million mt.
- CONAB estimated Brazilian 2021/22 corn exports at 23.0 million mt with imports at 2.3 million. It is forecast by some that Brazil will export just 19.0 million mt of corn with import surpassing 3.5 million. The net result is that US 2021/22 corn exports are understated by at least 250-400 million bu.
- The Business Standard is reporting that India will soon announce that the Government will allow the import 1.2-1.5 million mt of soymeal to battle surging feed costs for poultry firms. Argentine meal offers beyond October are difficult to find, but commercials wonder if China coastal crushers could export soymeal to India, while the soyoil would be used domestically. China is positioned to be a meal exporter amid the high cost of ocean freight and need for China to boost crush margins. India’s meal import program would take 6-9 months to complete. Not long ago, India was a world soymeal exporter, so the switch to being a large importer is important to world meal trade patterns.
- The Russian wheat harvest is 54% completed with yield to date forecasting a 75 million mt crop. Black Sea wheat offers keep rising amid limited farmer holding. We guestimate the final Russian wheat crop in a range of 73-76.5 million mt, which is well below the July USDA forecast of 85.0 million. The USDA will likely cut their Russian 2021 wheat crop estimate to 79-80 million on Thursday. Russian fob wheat prices pushed up to $277-279/mt at the close.
- The midday weather forecast is vastly drier across the SE US and Florida as a tropical storm is further east across E Florida and the Atlantic. Dry weather deepens the drought across the Dakotas while Iowa/Illinois are slightly wetter (0.10-0.50″). The big concern is Minnesota and through the Plains where rain totals will be less than 0.50″ through August 20. Nebraska/Kansas must be closely followed amid falling soil moisture.
- High temperatures will range from the upper 80′s to the lower 100′s into the weekend. The coming heat will add to crop stress. The GFS weather forecast has subtracted rain from the Dakotas (like the EU model solution).
- December corn has been straddling $5.50 for 11 consecutive days as traders await US yield definition following a summer of weather differences. Will good crops in the E Midwest be enough to offset losses in the N Plains, N Iowa, and Minnesota. World stock/use ratios of corn, wheat, and soy are bullish. It is the tightness of world grain that is raising Chicago corn/soybean harvest lows.