- HEADLINES: Chicago shrugs off Central US weather threat; Market hopes for larger Ukrainian exports.
- The wild back and forth of ag markets continues, with wheat and corn lower and soybeans slightly higher at midday. Central US weather threats have been dismissed, for now, in favour of record August Russian wheat exports and funds’ unwilling to exit short positions ahead of Pro Farmer’s tour of the Midwest next week. Variability is being found in OH this morning, while there is little doubt yields in SD will be up year on year following dire drought south/southeast of SD in late summer 2022. Key will be ear checks and pod counts as the two legs of the tour converge in IL on Wed/Thurs.
- Black Sea headlines since last week have been a battle of escalating military tension within the Black Sea and hope that Ukrainian stocks will be granted safe passage to the world market by late 2023. Romania’s Prime Minister suggests 60% of Ukraine’s surplus may be moved through Romania. The European Commission is “considering’ providing a subsidy to move Ukrainian grain through eastern EU member states. Otherwise, there is nothing concrete available, and most importantly nothing surrounding details of allocating funds, but wheat markets worldwide are unfazed by Black Sea execution risks. Russian export margins remain profitable.
- More and more Russian wheat business will be that of private Government to Government deals, likely including any Indian business, and so the details of quantity, timing, freight and fob costs will be somewhat opaque at best. Russia’s interior cash wheat market is up $2-4/mt this week. Recall seasonally the market there rises into Dec-Jan.
- We also note that still no pattern shifts are advertised in the Southern Hemisphere prior to Sep 2-3. Complete dryness stays in place across Cordoba in Central Argentina and across New South Wales and Queensland in eastern Australia. Sep rainfall is key in determining yields there, and work suggests that in Argentina Sep rainfall of 2-4” is needed to salvage potential. S Hemisphere wheat yield loss is a growing threat.
- US export inspections through the week ending Aug 17 featured 19 million bu of corn, vs. 18 million the previous week, 11 million bu of wheat, vs. 10 million the previous week, and 12 million bu of soybeans, vs. 15 million the prior week. We note the previous week’s shipments were revised upward 2 million bu in corn, 4 million bu in soybeans and 3 million bu of wheat. Old crop corn and soy exports are unlikely to be revised amid stable late-season shipments. Weekly wheat inspections moving forward must average 13 million bu per week to meet USDA’s annual target.
- US exporters this morning sold 159,350 mt of new crop soy to unknown destinations and another 112,000 mt of new crop corn to Mexico. Unlike a year ago, US/Brazilian corn is not prohibitively expensive which bodes favourably for re-stocking among the principal importers.
- Stats Canada’s model-based production estimates will be published on August 29. Downward revisions are no doubt expected, but unfortunately official Stats Can data won’t be available until autumn. Canadian-centred markets continue to add premium. Spot canola this morning is firm along with Nov Chicago soy. Dec Chicago oats are up $0.03/bu and testing the highs of mid-July at $4.65.
- The midday GFS weather forecast is consistent with morning output. Dangerous heat persists Central US-wide into Fri/Sat. Temperature moderation occurs briefly thereafter, but a pattern of above-normal temperatures remains most probable into the opening days of September. Heat peaks across the C Plains on Tues-Wed, with highs reaching 103-105 from TX to far western IA. Temperatures peak in the heart of the Midwest Thurs-Fri, with highs from 96-101 offered to IA, MO, IL, IN and KY. And there is just no precipitation of note indicated throughout the next 10 days. Expect changeable 11–15-day guidance as activity in the tropics ramps up. Currently no major tropical storm/hurricanes are expected to make US landfall nearby.
- Pro Farmer dominates row crop price discovery this week. We maintain that actual yield potential won’t be known until combines begin to role. Seasonal/annual lows will be forged by early Sep. US soy yield loss of 0.5-1.0 bushels/acre is a big deal.