- Chicago mixed at midday, soyoil rises on bullish chart development; GFS weather forecast drier/warmer on midday run.
- Chicago grain futures are weaker on chart related selling and news that the Teamsters Union served the CN railroad with a 72-hour strike notice as the work stoppage on Canadian rail line is ongoing. The notice says that none of the labour issues are insurmountable and is open to further negotiations. The Union is challenging the binding arbitration call from Labor Sec Mackinnon.
- US wheat futures resumed their decline amid the wrinkle in the reopening of Canadian railroads, which then set a negative tone in corn. We assume that Canadian courts will become involved in the newly announced strike and the need to return Canadian rail lines to full operations. The legal complexity of the Canadian rail strike now makes it difficult to know when service will resume. It is expected that the Canadian government may sue the Teamster Union to force members back to work.
- Chicago brokers estimate that the managed money has sold 2,800 contracts of wheat and 3,200 contracts of corn, while buying 2,900 contracts of soybeans. In the products, managed money has sold 3,100 contracts of soymeal and bought 3,600 contracts of soyoil.
- The USDA also announced the daily sale of 120,000 mt of US soybeans to an unknown destination, presumably China. There is talk that China has secured an additional 3-5 cargoes of US soybeans for November today.
- Pro Farmer is expected to release their 2024 US corn yield estimate later today following this week’s crop tour. Pro Farmer does not peg US soybean yield due to the importance of weather and growing conditions over the next 3-5 weeks. Early soybean harvest is underway in the Delta with yield reports varying widely depending on late season rainfall. The US corn harvest has pushed into Kentucky and Southern Missouri with yield reports being equal to or slightly above last year.
- The midday GFS weather forecast is drier with less rain/more heat than in the overnight run. Whether or not this run is better than recent wetter forecasts is unknown. Unfortunately, the GFS forecast appears to be struggling with the week 2 forecast. Nearby, warm, and dry weather is forecast across the Central US. Heat and dryness will cause US crop conditions to decline next week. Rain needs to return in early September to boost soybean seed size. Central US weather matters for US corn/soybean yields for another 2-3 weeks.
- Soyoil charts are turning upwards with the push above Thursday’s high and the 20-day moving average basis December futures at $0.4025. The last time that soyoil closed above its 20-day moving average was back in mid-July. Corn and wheat futures are lower on the Canadian rail uncertainty and fear that Pro Farmer will release a corn yield that is above the August NASS estimate of 183.1 bushels/acre. Central US weather forecasts are drier than desired with rain needed next week.
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