- Chicago sags on cool US weather forecast; Energy/equity market continues recovery.
- Chicago ag markets are slightly weaker at midday as new investment flows back into equities and energies and as mild temperatures and rainfall in KS/NE this weekend keeps elevated yield ideas intact. Just how much record (by far) yields in the Central Midwest offset challenges in OH, the Southeast and parts of the W Plains is key and will be settled via NASS estimates on Monday. Yield estimates from the commercial trade ahead of USDA’s Aug report are centred at 182-183 bushels/acre for corn and 52.5 bushels/acre for soy. FAS’s daily reporting system was void of new export sales. Additionally, cash basis at major markets continues to slide as the last of old crop supplies is priced.
- Financial markets in the US and elsewhere continue to recovery from Monday’s lashing. Spot WTI crude is up $1.85 at $75.10 amid seasonally tightening US supply and demand. The US dollar index is up 0.2% at midday and sits near unchanged on the week.
- Funds this morning have been reluctant to chase Dec Chicago wheat higher following the contracts breaking through its 20-day moving average Tuesday. The Russian fob wheat market is again flat at $221-225/mt for delivery into December, and the global cash wheat market since mid-summer has been defined by a near complete lack of activity.
- Gulf SRW is relatively cheap in the global wheat market on a fob basis at $218/mt, but key is whether traditional importers opt to step up forward coverage at deflated prices. Jordan has re-tendered for optional origin wheat supplies this morning, which follows new tenders released from Egypt and Algeria Tuesday.
- US ethanol production in the week ending August 2 totalled 314 million gallons, down from the prior week’s all-time record 326 million gallons but up 4% year on year. Ethanol stocks were down 9 million gallons from the prior week at 998 million amid stable domestic/export disappearance. Final 2023/24 industrial corn disappearance is projected 10 million above USDA’s forecast in July. 20923/24 US corn exports too should be raised 25-40 million bu following June Census data, and so final US corn stocks are forecast to drop below 1,840 million bu.
- US commercial crude stocks last Friday totalled 429 million barrels, vs. 433 million the prior week and down 4% from early August 2023. Stocks of 429 million barrels reflects just three weeks of consumption, which in turn is at the lower end of recent years. Crude has value below $72.
- Ukrainian corn fob premiums are up another $0.06-0.07/bu at $1.10-1.35/bu over Chicago futures for Sep-Nov delivery. Reductions to Ukrainian corn production have paused at 23-24 million mt, vs. USDA’s 27.7 and 31 a year ago. Harvest data is awaited as crippling drought there gets extended into late Aug.
- The Central US midday GFS weather forecast is wetter in southern IL but unchanged from morning output elsewhere. Mild to cool temperatures will blanket all but TX/OK this week. Highs across the principal Corn Belt will range from the upper 60s to low 80s. Overnight lows are forecast to drop into the upper 40s across the Dakotas, MN, WI, and northern IA. Heat resumes after Aug 14-15, but extreme readings are projected to favour areas west and south of IA. Rainfall into Aug 13 favours KS. One system is forecast to impact eastern NE, IA, MO, and southern IL Aug 14-15.
- The spec community’s US yield forecasts are very likely much higher than the commercial trade’s. Balance sheet work suggests a US corn yield above 184 and soy yield above 53 are needed to guarantee burdensome domestic supplies. NASS’s August survey/satellite-based yields are awaited. An export demand story looms in corn.