- Corn/soybeans form new contract low and bounce; World Ocean Freight Rates Bottoming?
- Chicago corn pushed to a new contract low while wheat/soybeans retreat near prior early week lows. It is surprising that corn is enduring this much selling pressure amid rising overseas cash markets. Chicago corn selling is tied to old crop producer cash sales and the prospect of record large US yield. We note that world corn exporter stocks/use is at or near a record low, which is contrary to rising US corn stocks. US corn stocks as a percentage of world exporter total is record large at nearly 90% which strongly suggests that US corn export demand will be strong through April of 2025. Corn will have a demand story emerging once the market is able to understand how big is big in terms of the US corn yield. NASS has already released a record US corn yield of 183 bushels/acre; will the Pro Farmer Tour find an even larger yield next week.
- Paris wheat futures are rising on short covering with prices higher as the harvest comes to an end. 2024/25 world wheat trade through August 15 is 19.5 million mt, equal to last year which was 19.45 million mt. 2024/25 wheat trade is occurring regardless of Turkey’s absence as an importer of 1-1.4 million mt/month. 2023/24 world corn trade is up 19 million mt at a record 154.5 million mt with soybean trade at 138.7 million mt, down 1 million. The point is soybean trade is starting to struggle, but world grain trade is holding strong on falling prices.
- World ocean freight rates are finding their “sea legs” after falling for most of the past quarter on declining demand for iron ore. The rise in capesize and bottoming in panamax ocean freight indexes indicate that end users are seeing value in dropping ore/grain/freight costs. A low in the ocean vessel charter market could be a sign of improving world trade or that China is starting to become active as a grain importer. A year ago, China was an active buyer/importer of Brazilian corn from August through year end. China has imported record tonnages of Brazilian soybeans in the past year but has been non-existent in the world grain market as a buyer of wheat/corn.
- Chicago brokers estimate that the managed money has sold 4,200 contracts of soybeans and 6,400 contracts of corn, while being flat in wheat. In the soy products, funds have bought 2,100 contracts of soyoil and sold 3,200 contracts of soymeal. Soybeans and corn both scored new contract lows this morning.
- The Central US midday GFS weather forecast run is consistent with the overnight solution which raises our confidence in its correctness. A broad drying trend is ahead for the Central US with any extreme heat confined to the Plains and the Delta. Central US rainfall chances are poor, and soil moisture looks to stay in sharp decline. A high-pressure ridge holds across the Central US with brief intrusions into the Midwest. The higher heights aloft limits Midwest rainfall and retards the monsoonal flow of moisture from Mexico. The heat/dryness pushes crop maturation, but following the rains this week, any acute moisture stress comes too late to dramatically impact yield. We anticipate a 1-2% decline in good/excellent corn/soy ratings on Monday.
- The Russian/Ukraine war has entered a deeper boil with Ukraine destroying a Russian bridge over the Seym River which is hindering civilian evacuations. The enhanced war effort by Ukraine has grain traders cautious about taking a big-short into the weekend. Midwest cash basis levels are stabilising following early week cash corn/soy sales. Chicago downside price risk is waning while traders assess the managed money short. The Pro Farmer Crop Tour starts Monday and field yield reports will be numerous. Dry S American weather is staring to be watched amid the driest subsoil in over a decade.
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