• HEADLINES: Black Sea grain corridor uncertainty; GFS weather forecast offers dryness and heat in midday run beyond July 21: Key weekend ahead.

• Chicago grain futures are mixed at midday as headlines and weather forecasts clash. Selling emerged after the morning opening on news that Turkey’s President Erdogan and Russian President Putin agreed that the Black Sea Grain Corridor should stay open. This news produced a sharp Chicago selloff as the bulls banked short term profits heading into an uncertain Central US weather weekend.

• However, the Russian Government has not confirmed a deal and Putin did not commit to keeping the corridor open. Russian demands for its continuance have not been met by the UN or the EU offers. And Russia has been cagey in prior months saying that Ukraine grain has not flowed to those that need it most, sub–Saharan Africa or SE Asia where food security is acute. We have doubts that the corridor deal can be struck, but traders are less certain today as to whether the corridor will close. This has produced early Chicago selling which has dropped values into midday and curtailed volume.

• Chicago brokers estimate that managed money has bought the grains and sold the soy complex. Fund managers have bought 3,200 contracts of wheat and 2,900 contracts of corn while selling 5,300 contracts of soybeans, 5,900 contracts of soyoil and 600 contracts of soymeal. It is a reduction of Chicago risk.

• The US dollar is little changed at midday, which is slowing the flow of new capital into commodities. However, there continues to be an appetite for raw materials in a further drop in the greenback. Historically, as the US Central Bank ends its rate rising cycle, there are flows back into raw material markets and traditionally such moves occur over several months. The US labour market is strong enough that a 2023 recession will be avoided. However, a Q1 economic dip is likely if the US dollar stays in a nosedive on rising and record large US Government debt.

• We look for US corn/soybean ratings to rise 1-2% on Monday due to this week’s rain. Even with the gains, ratings will stay historically low as producers report that soy crop growth was stunted by the acute dryness of May/June. Midwest corn is reported to be short with the nodes stacked on each other. We believe that US corn/soybean yields will be below trend, it is the next 6 weeks of Central US weather that determines how far below. The coming hot/dry forecast of the N Plains and the NW Midwest suggests that US corn/soybean ratings will fall again into early August. NASS will produce US corn/soy yield estimates in August based on their producer surveys. Actual NASS field surveys will wait until September/October.

• Canadian producers fear a rerun of 2021 in that their crops are pounded by dryness with heat ramping up in late July and August. Talk of a 17.0 million mt canola crop is growing which would have a negative impact on crush/exports. The US and Canadian biofuel industry is counting on canola oil as a feedstock. If prices keep rising, it is soyoil that must replace lost canola production.

• The midday GFS weather forecast is like the overnight run with limited rainfall to fall across the N Plains and the NW Midwest into July 25. Near normal rainfall of 0.5-1.50” is forecast for the Southwest, Central and Eastern Midwest, with the Delta sharing in the rain this weekend.

• Temperatures hold at near to below normal with no extreme heat into July 21. Highs will range from the upper 70’s to the upper 80’s. Thereafter, a much warmer temperature pattern returns with extreme heat noted for the Canadian Prairies, the Northern Plains and the NW Midwest highs running from the mid 80’s to the lower 100’s. A ridge of high-pressure forms across SC Canada and extends southward into the Northern Plains. This ridge pattern is like the North American weather pattern of May. How long it persists is unknown.

• What will the weekend headlines be on the Black Sea Grain Corridor, will the agreement be extended, or will it cease? The UN’s last-ditch effort to extend the pact is being listened to by Moscow. We put low odds on a Black Sea extension which is marginally up from earlier this week. W Midwest cash corn bids are red hot and amid a new threatening weather pattern.

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