• Chicago values are again mixed at midday. Row crops have added to overnight losses as better than expected rain works across Central IL and as midday weather updates lack sustained heat and dryness into the opening days of August. Recorded precipitation in the last 24 hours now includes totals of 0.50-1.00″ across MN, NE, KS, N MO and W IL. US wheat futures found buying this morning following purchases from Egypt and Jordan.

• FAS through its daily reporting system announced that US exporters sold 306,000 mt of soybeans to China and unknown destinations for new crop delivery. Exporters also sold 207,880 mt of corn to unknown destinations, of which 25,400 is for old crop delivery. We hear that the corn sale was likely made to one or more Latin American countries.

• Egypt’s GASC this m morning secured 115,000 mt of Ukrainian wheat for late August delivery, and only Black Sea origin was offered. The tender’s details were absent as of now but the cheapest Ukrainian offer was quoted at $209/mt, basis fob. Egypt’s fob purchase price last week $212. Ukraine’s lowest offer is viewed as aggressive given Black Sea 12.5-pro fob quotes this morning of $206-207/mt.

• Other news is lacking and N Hemisphere weather will continue to drive daily price action. We note that updated EU model weekly guidance features normal precipitation and slightly above normal Central US temperatures throughout the next 30 days. Climate work further suggests that any sustained strong high-pressure ridging will largely avoid the primary US Ag Belt. Wet weather is most probable across the Central Plains and Upper Midwest into the second half of August.

• Updated crop maps from the USDA also include above average vegetation health across Europe and Ukraine. Crop health there has been maintained despite a pattern of below normal precipitation across Western Europe and much of Ukraine in the last 30 days. Heat has been absent from Ukraine so far in July. Subsoil moisture in Europe and Ukraine remains adequate. Time is running out for Mother Nature to materially reduce Northern Hemisphere corn yield potential.

• The EIA’s weekly petroleum report on Wednesday is expected to include another modest boost in (2-5 million gallons) in weekly US ethanol production. A more pronounced gain is unlikely as gasoline use stays plateaued. Energy markets have rallied this week as vaccine trials show promise. International travel in the near-term will remain severely reduced. Chicago ethanol futures through December exist in a range of $1.08-1.12/gallon. The recent break in ethanol prices has pulled futures-based production margins into negative territory.

• Radar maps continue to show light/moderate rainfall working slowly across the western and central Corn Belt. This system will progress across IL and into IN in the next 24 hours. Accumulation of 0.25-0.50″ is expected.

• The midday GFS weather forecast is warmer and drier in the 11-15 day period as it allows strong high pressure ridging to expand into the far Southwestern Midwest. This will be followed but confidence in extended range forecasts remain low. Otherwise, output is similar to prior runs through the next 10 days. A pattern of active rainfall will persist across the E Plains, Midwest and mid-South into Aug 1. Cumulative totals of 1.00-1.75″ will blanket a majority of the Corn Belt. Relative warmth resumes early next week but damaging heat is not indicated.

• The need to find corn demand has lingered in the background throughout the growing season. With pollination occurring under largely favourable conditions, demand will play a more central role in price determination. Rallies in all major crop markets will be laboured without a major threat to yield in August or during harvest.

• Chicago values are widely mixed at midday. The grains lower while soybeans hold amid ongoing interest from China. Corn bounced from the morning lows on larger than expected weekly export inspections. December soymeal has an open chart gap at $300/ton which is solid resistance before the complex turns back lower.

• Wheat futures gapped lower on sliding interior Russian/Ukraine prices and more aggressive farm selling. KC September wheat is expected to at least retest its low at $4.25/bu. We would note that last summer KC wheat did not forge its low until September at a price of $3.75. It may be premature to turn too bullish of wheat. It is a bear supply story in corn, whilst world wheat lacks export demand and recent Chinese purchases of US soybeans underpins the complex along with rising Malaysian palmoil futures.

• Chicago brokers estimate that funds have sold 8,400 contracts of wheat and 4,000 contracts of corn, while buying 2,500 contracts of soybeans. In the products, funds have bought 2,600 contracts of meal and 1,200 contracts of soyoil. The funds are extending their long soybean/short corn spread.

• US weekly export inspections were large for corn, but modest for soy/wheat. The US exported a stout 45.3 million bu of US corn, 18.4 million bu of wheat, and 16.6 million bu of soybeans. The corn exports were larger than expected and included 5.7 million bu loaded to China. The US also sent 2.7 million bu of soybeans to China.

• For their respective crop years to date, the US has exported 1,430 million bu of corn (down 286 million or 17%), 1,407 million bu of soybeans (down 36 million or 2.5%), and 131 million bu of wheat (up 6 million or 4.5%). There are just 6 weeks remaining in the old crop years for corn and soybeans.

• FAS reported 132,000 mt of US soybeans sold for the 2020/21 crop year to China. US exporters report that they see no sign of China’s interest in US soybeans this morning.

• There have been discussions on the impact of Central US heat on 2020 US corn yield. Most are nudging corn yields down on the warm temperatures. However, the warmth has not been lasting outside of the Central Plains (and at times in the Delta). The Midwest has endured several hot days, but the heat has not been extreme or lasting. This has allowed corn to respirate and move nutrients through the stalk. We would be careful about nudging US corn yield lower unless extreme heat develops/lasts during the fill stage. Thankfully, heat so far has not impacted pollination. The 50% pollination rate should be reached today with the kernel fill stage lasting into the middle of August. Any prior or coming heat will be less worrisome for US/Delta soybean yields in coming weeks.

• Needed rain is falling across S IA/ MO. The midday GFS weather forecast is cooler through the E Midwest/Delta and warmer in the Plains than the overnight run. Rains have been shifted southeast into the E Midwest and the Tennessee Valley from WI/MN/IA. The need for moisture is more acute across the E and S Midwest which will favour US crop yield potential. Any high pressure ridging is less amplified and further south which allows Midwest temperatures to retreat to the 80′s to the lower 90′s for highs next week. Seasonally cool temperatures will prevail this week through Friday with highs in the 70′s to mid 80′s. The extended 11-15 day forecast calls for a Central US high pressure ridge, but the forecast this far out cannot be trusted and stays erratic.

• Corn prices are back down testing last week’s low on the US and world oversupply. The rally in palmoil futures is sparking a soy rally, but it is doubtful that the tropical oil boom can persist. World wheat demand is struggling and the fall in futures reflects a Black Sea wheat crop that is similar to last year. Soybeans should be within a few cents of a top while the grains seasonally weaken into late August.

• Chicago values are mixed at midday with corn/soybeans firm, while the wheat market sags on diminished fund buying. Spread unwinding has been the morning’s feature with wheat/corn and soybean/corn spreads being exited.

• The volume of trade is average, but few end users desire to chase corn/ soybean markets higher amid favourable Central US weather. And US farmers are more willing sellers of stored old crop grain now that more regular rains are making their new crops. Sweeping bins is something that farmers will be engaged in to prepare for a large coming new crop. We anticipate a mixed close with December corn and November soybeans up against resistance at $3.39 and $8.95-9.05, respectively.

• FAS confirmed the China booked 522,000 my of US soybeans with another were 351,000 mt sold to an unknown destination (thought to be China). Of the total, 197,000 my was for old crop with the remainder for new crop. China has become a much more regular soybean buyer this week, and the hope is that China will continue to book 1.5-1.7 million mt/weekly going forward. Exporters report that China continues to seek additional US soybeans, while interest in wheat, corn, and soyoil appears to have temporarily abated.

• Chicago brokers estimate that funds have bought 9,700 contracts of corn and 5,700 contracts of soybeans, while selling 6,600 contracts of wheat. Funds have bought 4,300 contracts ofsoyoil and 2,100 contracts of soymeal.

• US weekly export sales for the week ending July 9 were; 28.1 million bu of wheat, 38.6 million bu of old crop and 25.8 million bu of new crop corn, and 11.5 million bu of old crop soybeans and 28.2 million bu of new crop. The corn and soybean sales totals were large, and they will be big again next week following daily announcements this week to China.

• On a known basis, China has now booked 2.1 million mt of old and 1.8 million of new crop corn. Adding in this week’s daily sales announcements, China has secured around 5.8 million mt of US corn in both crop years combined. Based on poor 2019 crop quality, we would suspect that 1 million mt of the US the old crop corn sale could get rolled forward to new crop. This means that China has nearly booked 5.0 million mt of 2020/21 US corn or 196 million bu. In terms of yield, this works out to 2.3 bushels/acre of the 2020 US corn crop. China has only shipped out 16.6 million bu of 84 million of old crop purchases. Between the US and Ukraine, China has fulfilled its TRQ corn purchase commitment for 2020.

• The UN is warning of a knock-on impact of Covid-19 with falls in demand that could result in sharp falls in grain/food values. Egypt’s GASC wheat tender secured less than desired tonnages as credit was not available to make the full purchase. Outside of China, world commodity demand is in fast retreat.

• Warm/wet is the GFS weather forecast over the next 14 days with the jet stream sagging further southward. The sagging jet stream allows temperatures to be slightly cooler (vs the overnight run) while providing a daily chance of Midwest/Plains rainfall. The 10-day rainfall outlook suggests that any heavy rain is focused across the Central and Southern Midwest. A front will hold across this area and became the focal point for frequent showers/storms. The regular rain along with modification in temperatures favours reproducing corn/soy crops. Crop condition ratings are expected to start rising again coming weeks. The 10-15 day forecast offers no extreme heat with ongoing rain. Midwest high temperatures hold in the 80′s to lower 90′s.

• The wheat market did not like that China did not show up as a buyer for 2 cargoes of US SRW wheat in the sales report. Soybean futures are firm on new fund buying while corn is supported by wheat/corn spread unwinding. The Central US weather forecast is warm/wet which favours yield. The long-range NOAA weather forecast did not offer any real concern for August rainfall or temperatures. Record US corn/soy yields are possible. We remain bearish amid large supplies/stocks.

• Chicago values are mixed to sharply higher with wheat gaining on both corn/soybeans at midday. Rumours abound that China may have secured 2 cargoes of US SRW wheat which has pushed Chicago wheat into buy stops with spot futures are their best levels since March. September Chicago wheat is back testing key chart-based resistance at $5.50 after pushing through the 200 day moving average at $4.35. Research looks for the rally in Sept Chicago wheat to pause against $5.50-5.60 until there is confirmation of the Chinese purchase and the size of the 2020 Russian/Ukraine wheat crops.

• Midwest cash wheat sources are less sure why China would be securing the highest cost and lower protein wheat in the world. China’s need is more for a protein wheat that would add to milling quality. Cash confirmation is lacking, but traders will be looking to the weekly export sales report for confirmation since the total is at or below the 100,000 mt that must be reported daily.

• Corn/soy is being pulled upwards with wheat on diminished fund selling. The funds are not as aggressive in selling the summer row crops with wheat up $0.18/bu.

• Chicago brokers estimate that funds have bought 9,400 contracts of wheat and 3,200 contracts of soybeans, while buying 2,300 contracts of corn. Funds have come back and repurchased all early corn sales. Funds have also bought 3,600 contracts of soyoil while being flat in soymeal. The US farmer has been a modest seller of soybeans on the rally while waiting for better levels in wheat/corn before engaging again.

• FAS reported that China booked 132,000 my of new crop corn, and 389,000 my of US soybeans. The US soybean sale was well rumoured in prior days and cash sources argue that China is finished with its TRQ buying in corn. China strictly controls the importation of GMO corn with a license needed. Along with 2 cargoes of US wheat, there are rumours that China may have interest for US soyoil, no sales tonnages are mentioned. A few additional US soybean cargoes may have been sold to China today, yet US exporters report that their interest is diminished as prices have rallied.

• EIA reported that the US produced 274 million gallons of ethanol last week, up 5 million gallons from the prior week, but below the 28.

• NOPA’s June soybean crush rate fell to 167.3 million bu, the third straight monthly decline. US soyoil stocks were pegged at a bullish 1,778 million pounds which was lower than expected on better domestic use.

• Welcome/needed rain is falling across the key production areas of; N MO, C IL, and S IA with amounts ranging from 0.5-2.50″. The timing of the rain is ideal for corn pollination. The midday GFS weather forecast calls for IL/IN to receive 2-4.00″ of rain over the next 10 days with nearby totals of 0.5-2.50″. Any high-pressure ridging is elongated across the Delta/SE US States which will act to shunt upper air moisture north into passing Midwest cold fronts. Convective Midwest thunder storms are forecast daily. Soil moisture builds will occur into August. Temperatures will stay warm, but no excessive heat is foreseen. The W Midwest and N Plains will be relatively cool with lows in the 50′s/60′s.

• The upside in Chicago wheat becomes limited above $5.50-5.60 until more is known about Black Sea wheat crop sizes. Weather is favourable for US summer row crops and how big is big will soon become the yield question for traders. Our stance stays bearish on corn/soy bounces. We see US ethanol production stagnating between 260-275 million gallons going forward into new crop. The big seasonal push for gasoline will be ending in early August. We would caution against chasing wheat here with producers contemplating  sales in another 5-15 cents.

• Chicago values are mixed at midday with a turnaround Tuesday not finding much new demand. Amid some of the best rainfall potential (2-week Midwest forecast offers 0.75-3.00″) in the past 6 weeks, the bulls are having trouble garnering upside momentum. Much of the morning buying is short covering and the acceptance of windfall profits following 2 days of hefty Chicago losses.

• Mother Nature will hold the deciding voice in Chicago price direction, but the warm/wet Midwest forecast favours corn/soy crops that are reproducing. NASS should find that 50% of the US corn crop will be pollinating through Sunday. This makes the 2-week weather forecast into late July key. We look for a mixed Chicago close in the summer row crops while wheat values rise amid disappointing Black Sea yields and reluctant Black Sea farmer sales.

• Chicago brokers estimate that funds are net buyers of 3,300 contracts of wheat and 3,500 contracts of soybeans, while selling 2,200 contracts of corn. In the soy products, funds have bought 2,900 contracts of soymeal and 3,600 contracts of soyoil. The funds are back to piling into a larger net short corn position while trying to exit a large soybean long. The wheat market is trying to rise above the 200-day moving average that crosses at $5.35 basis September Chicago futures. A close above $5.35 September Chicago wheat would confirm a seasonal low and strongly suggest that wheat is entering a more dynamic bullish price phase.

• FAS reported that China booked another 1,762,000 mt of US new crop corn, the third largest daily US corn sale on record and the biggest 1-day sale to China ever. The USDA also confirmed that 129,000 my of US soybeans were sold for 2020/21. Research estimates that China has now secured some 3.6 million mt (141 million bu) of US corn under Phase One which is split between old/new crop years.

• European sources report that China has also booked 3.0 million mt of Ukraine corn over the past 2 weeks for a combined China purchase total of 6.6 million mt. Under TRQ rules, China must issue annual import licenses for 7.2 million mt of world corn. Most of these licenses are now filled. Note that you cannot import corn into China without a GMO license. US corn futures sold off following a higher opening as traders fear that China may have only 500,000 of open demand. Much of China’s TRQ corn demand is fulfilled. Future China corn buying/imports will require state purchases through COFCO or Sinograin for their own account.

• GASC purchased 114,000 mt of Russian wheat at $226.75 basis C&F for late August shipment. The purchase volume was less than expected which caused US wheat futures to retreat from their highs. GASC has additional late August and September needs and is likely to use any modest world wheat price correction to extend their forward coverage. Russian fob prices keep rising as Russian farmers are enduring less than hoped for yields and are tightfisted with supply.

• NOPA is expected to announce that its June soybean crush rate fell to a 9-month low of 162.2 million bu according to a Reuters News survey. This would be the third straight monthly decline and the smallest monthly crush since September. The weak crush trend is expected to persist through July.

• The midday GFS weather forecast is slightly drier in the Plains and slightly wetter for E IA, IL, IN and KY. A series of storm systems will regularly pull across the Midwest every 2-3 days. Any high-pressure ridging will be elongated across the Delta/Gulf states with a seasonally fast flowing jet stream sinking southward. A more zonal flow looks to be offered beyond the next week with the high-pressure ridge building back west across the Western US. This is a warm/wet profile for the Central US which favours yield.

• If the US corn market can not sustain much of a recovery following the third largest daily corn sale on record, it is a bearish omen. Chicago traders will take up the chore of watching/trading raindrops over the next few weeks as moisture is critical to yield determination. This is the most water sensitive time of the year for corn. World wheat prices are rising which underpins breaks. China has likely secured another 3-5 cargoes of US soybeans today. It is all about Midwest weather into the weekend.

• Chicago futures are lower at midday with corn, soybeans and wheat holding in the red. An early rally in wheat was not sustained with the summer row crops back pulling futures lower. Traders are loath to sell corn and soybeans more aggressively with a broad expectation that US corn/soy crop conditions will decline in the afternoon NASS report. Thereafter, it will be the location and amount of rain that will determine Chicago price action into the end of the week.

• Chicago brokers estimate that funds have sold 5,200 contracts of Chicago wheat, 9,800 contracts of Chicago corn, and 10,300 contracts of soybeans. Funds have also sold 5,700 contracts of soymeal and 3,400 contracts of soyoil. Funds are on the sell side across Chicago with farmers holding fast and not making sales.

• Technically, soybeans have fallen below their 20/50 day moving averages while corn has crossed the 50 day and is back to where the rally started before the June 30 acreage report. The wheat market is holding in a range.

• For the week ending July 9, the US exported 79 million bu of total grain, up 1.7 million bu from the past week, and up 5 million from last year. The US shipped out 35.5 million bu of corn, 17.7 million bu of soybeans, and 22.9 million bu of wheat. The wheat export pace was above trade expectations.

• For their respective crop years to date, the US has exported 1,385 million bu of corn (down 314 million or 22%), 1,391 million bu of soybeans (down 31 million or 2%) and, and 110 million bu of wheat (up 2 million or 2% at this early stage in the crop year). China shipped out last week 5.9 million bu of US soybeans or 33% of the total. The US corn and soybean export pace must pick up for the US to reach the July WASDE annual forecast.

• Brazil has now harvested 35% of their winter corn crop, which is below last year’s pace but will within the cutting pace of the past 5 years. Brazil remains active in selling corn abroad with prices well below the US Gulf. S American corn export prices are likely to steal US corn export demand well into Q4. Both Argentina and Brazil are looking for new feedgrain export opportunities.

• We hear that Ukraine has likely sold China 3 million mt of corn in the past 10 days which when combined with sales from the US under TRQ places the cumulative sales close to 5.0 million mt. This leaves 1-2 million mt of open world corn sales to China, but most exporters do not foresee China taking more than 2.5-3.0 million mt from the US during the 2020/21 crop year.

• World feed wheat sellers are scrambling for supply against rising Black Sea prices and a pure lack of feed wheat export availability. The spread between 11.5% and 12.5% protein wheat (Black Sea) has narrowed to $2-3/my which leaves Black Sea feed wheat shorts with huge losses. The Russian winter wheat crop is of high quality and testing 12-13.5% on their protein scale.

• The midday GFS weather forecast is less hot with a broad area of 1.00-3.00″ of rain covering IA, IL and IN during the remainder of the week. The mean position of the high-pressure ridge elongates and progresses east across the Delta/Gulf States and then retrogrades westward in the 9-15 day period. This produces a favourable NW upper air flow through the Midwest with seasonal temperatures and regular rain chances into July 30. Any real heat occurs from Friday through next Monday with more seasonal temperatures thereafter. Our confidence in the high-pressure ridge positioning being over the Western US during August if rising.

• Crop making rain is offered for the next 2 weeks with extreme heat not lasting. Our view stays bearish on corn/soy with wheat having sporadic rallies due to rising Black Sea prices. Any bounce to open chart gaps in corn/soybeans appear to be a sales opportunity. We would see rallies to $3.40+ December corn and $8.85+ in November soybeans as being solid sales levels. A turnaround Tuesday could offer such an opportunity to sell the gaps left from overnight. We anticipate a 1-2% decline in corn and soybean conditions this afternoon.

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Weekend summary 10 July 2020

• Chicago futures are higher at midday with funds squaring positions ahead of the July USDA Crop report amid a threatening extended range Central US weather forecast. The prospect of another episode of heat/dryness mid to late next week makes the coming next 5 days of rain important to yield. Showers are falling this morning across NW Iowa and through portions of KS/MO at midday.

• Complicating matters is the fact that the forecast models are having trouble identifying convective thunderstorm activity which has produced better than expected rain across the W Midwest/Plains. Chicago will be weather-driven, with Sunday/Monday trade important in determining price action into late July.

• Chicago brokers estimate that funds have bought 5,400 contracts of wheat, 7,500 contracts of corn, and 6,400 contracts of soybeans. In soy products, funds have bought 4,700 contracts of soymeal while selling 3,100 contracts of soyoil.

• US weekly export sales for the week ending July 2 included 12.0 million bu of US wheat, 23.6 million bu of old and 16.1 million bu of new crop corn, and 35 million bu of old and 14.0 million bu of new crop soybeans. The weekly corn and soybean sales were slightly better than expected.

• For their respective crop years to date, the US has sold 278 million bu of wheat (up 2 million from last year or about 1%), 1,689 million bu of corn (down 257 million or 13%), and 1,690 million bu of soybeans (down 93 million or 5%). We look for the USDA to trim their 2019/20 US corn and soybean export estimates slightly in the July WASDE report on Friday.

• Russian wheat prices are rising on the initial disappointing yield trend winter wheat harvest. A deeper expansion into the harvest is needed to determine a true Russian wheat crop size but yield reductions in Ukraine and Russia are pushing end users to expand their forward coverage. Additional yield data points on yield are required to show a full reflection of the 2020 Black Sea and Russian wheat crops. Research looks for the USDA to leave the 2020 Russian wheat crop steady at 77 million mt or maybe trim the crop to 75.0 million. Interior Russian wheat prices are up $5-6/mt for the week.

• Argentine corn for August has slipped to a new low of $0.50/bu below the US Gulf with Brazilian corn following. The Argentines remain aggressive in offering corn to the world feedgrain export arena.

• No new daily sales of US corn, soybeans are wheat were announced this morning. China purchased a few US soybean cargoes early in the week, but they have been slower than expected buyers again this week. As the calendar turns to mid-July China needs to dramatically pick up its US soybean purchase pace.

• The midday GFS weather forecast is further north with rain in the nearby forecast, but cooler/wetter in the extended range (vs the overnight run). High pressure ridging will push a bit deeper into the Central Plains in the next 24 hours and this will act to force the jet stream across the N Plains and Great Lakes. 5-day rainfall of 0.75-1.75″ will impact W IA, MN, WI, WI and northern parts of IL, IN and OH. Areas further south will see limited precipitation but also near-normal temperatures.

• The midday GFS forecast is a bit quicker in forecasting the return of Midwest precipitation and cooler temperatures as it no longer expects the strongest ridging to reach into the heart of the Corn Belt. A pattern of light but daily showers is offered to the N Plains and C and E Midwest July 18-24. Cumulative totals are pegged at 0.25-1.50″. The E Midwest will be favoured.

• Uncertainty over Black Sea production and late July Central US weather will sustain fund short covering/buying in the near-term. Yet, massive downgrades to global end stocks forecasts are needed to prevent a more bearish pattern beyond summer. Work maintains that supply-driven rallies should be rewarded.

• Chicago futures are firm at midday with wheat rising sharply. EU and Black Sea wheat crop estimates this week have been inching lower, and winter yields across key areas of Southern Russia continue to disappoint. EU cash markets have been well supported despite the recent break in Russian fob quotes. Funds this morning were estimated to have been short a net 35,000 contracts in both Chicago and KC. Sep Chicago this morning traded easily through its 20-day moving day average, and short covering is the theme of the morning.

• However, we would mention that already US wheat is overpriced in the world marketplace. EU milling wheat futures are at midday are up just $0.07/bu, and so US wheat premiums to comparable EU/Black Sea origin will be widening.

• FAS failed to include any new US export sales to China or elsewhere this morning. Stepped-up Chinese buying of US soybeans is needed to sustain Nov above $9.00-9.10, while US corn demand increasingly is becoming limited to already captive markets.

• Brazil’s CONAB raised its 2019/20 Brazilian soybean crop estimate to 120.9 million mt, vs. 120.4 million in June. We suspect additional boosts to production will be made amid surprisingly large soybean export demand.

• Recall that the USDA pegs Brazil’s 2019/20 soybean crop at 124 million mt, and in recent months has not opted to follow CONAB’s guidance.

• CONAB lowered its total Brazilian corn crop estimate slightly to 100.6 million mt, vs. 101 million in June. Our view is that final Brazilian corn production will sit between 101-102 million mt, but we do mention yields in Mato Grosso do Sul and Parana have been better than expected. Safrinha yields in Mato Grosso are record large. The pace of Brazilian corn sales is beginning to accelerate.

• This week’s EIA data is viewed as slightly bearish corn in that ethanol production gains have been limited in recent weeks while ethanol stocks were higher for the first time since mid-April. Ethanol production through the week ending July 3 totaled 269 million gallons, up 4 million on the previous but well short of the 296 million gallons average needed to hit the USDA’s target. US gasoline use through the week totalled 8.77 million barrels/day, up 2% on the previous week but still down 10% from the same week a year ago. US crude stocks last Friday were a massive 539 million barrels, up 17% on the year.

• The midday GFS weather forecast is consistent with this morning’s solution. Showers will be widespread across the Northern Plains and Central Midwest into Mon/Tues. Cumulative totals of 0.50-1.00″ are offered to the Dakotas, MN, WI, northern IL, IN, OH and Ml. Temperatures into the weekend will moderate somewhat, with highs to be capped in the upper 80s and low 90s across the primary Corn Belt.

• Strong high-pressure ridging expands and reaches into the Midwest July 16-19. This will allow temperatures during this period to rise into the low/mid-90s. But the ridge will stay transitory in nature, with cooler temperatures and better rain chances projected in the 12-15 day period.

• US and world wheat markets are adding premium on lower than expected early EU/Black Sea winter yield results. Price action is validating that seasonal lows in wheat were scored earlier than normal. Corn/soy rallies will be laboured without lasting heat/dryness in the second half of July. Demand growth remains a concern.

• Chicago futures are mixed at midday with wheat firmer while corn/soybean futures trade either side of unchanged amid the ongoing debate over Central US weather. As has been the trend for weeks, the EU weather model has less rain than either the GFS, Canadian or the Ensemble models of the US or Canadian output. The EU model used to be the most accurate on rainfall, but since there have been updates, the model appears to be too dry as it misses convective shower activity, which is a large part of Central US rainfall during summer. On the other hand, the GFS forecast has returned wet for the Central US with any high pressure ridging to hold across the SW US for most of the next 70 days. The 11-15 day outlook remains difficult with any forecast being low confidence.

• FAS did not announce any new sales this morning to China or others. What has been absent so far this summer is sales to nations other than China. Covid-19 appears to have a negative impact on world grain trade. USDA is likely to cut its 2019/20 world corn export outlook by at least 6 million mt with the new crop wheat export campaign starting out slowly. Black Sea wheat vessels loading are well down from July last year amid the sharp fall in tourism and foodservice demand. The old crop corn export forecast will likely curtail 2020/21 world corn trade. The US market lacks a demand driver to push grain/soy upwards.

• Chicago brokers estimate that funds have bought 3,500 contracts of corn, 4,400 contracts of soybeans, and 4,200 contracts of Chicago wheat. In the products, funds have bought 1,200 contracts of soymeal and 2,700 contracts of soyoil. Funds were net buyers of the break awaiting the midday weather update.

• Private Russian wheat production estimates are retreating with most now seeing the 2020 crop in a range of 76-78 million mt based on early harvest data. Such a crop is above last year which would allow Russia to export 34-36 million mt of wheat. WASDE did not raise their 2020 wheat crop estimate in June and its forecast of 77 million mt now appears close to correct. We would reiterate that Russian exporters will try to push out as much wheat as possible until an export quota system is put in place during October.

• The world’s major ag currencies are generally weak vs the US$ with limited rally potential nearby. The Russian Ruble is priced at 71:1 US$, the Argentine Peso at 70.8:1, the Ukraine Hryvnia at 27:1 and the Brazilian Real at 5.32:1. The weakness of non-US ag currencies limits US export opportunities longer term amid overseas production expansion. Argentina is offering fob corn for August/September at $0.46/bu below the US Gulf while US wheat is $0.49-0.59/bu above Black Sea offers. US soybeans are competitive until late January when Brazilian offers are $0.55/bu cheaper. Like last summer, the US export opportunities are in decline in a supply driven US weather market.

• GASC tender results are awaited with it likely to be filled by Russian wheat. We await an announcement.

• The midday GFS weather forecast is like the overnight run and less threatening. The GFS retrogrades the high-pressure ridge west and south to a position over the SW US late week. The ridge in this position allows ridge-riding Midwest rain chances through Monday. None of the rains are heavy, but cumulative totals look to add up to 0.35-1.50″ over the next 6 days. Temperatures cool from the mid-90′s to more normal 80′s to lower 90′s.

• A new storm system is noted for next Tuesday which pulls through the N Plains and the W Midwest. This system produces additional showers/storms of 0.2-0.9″.

• The high-pressure ridge holds across the SW US through July 15 before elongating across the South Central US under humid weather conditions. Rains will ride the northern end of the ridge in crop areas from IA into OH.

• Option volatility is being extracted today, but Friday’s WASDE report and Central US weather will combine for considerable market risk. This is not a classic weather pattern set up for a dire Central US drought. Midwest rains will occur regularly with near to above normal temperatures. The jet stream is migrating back southward to a more normal position. Any acute/lasting dryness will be across the S Plains. Crops will be well watered across most of the Midwest/Delta into July 20.