• Chicago futures are mixed at midday with wheat lower while the summer row crops add weather premium to price. The morning rally has been on diminished volume as neither the bulls or bears are willing to push their case too hard with cooler temperatures and some rain across the Midwest from Wednesday through the weekend. A front pushes through the Midwest/Delta late week cooling things off and also producing widely scattered showers. Traders understand that the models have difficulty getting locations and amounts right with convective shower activity. No trader wants to caught buying the bulge ahead of green blobs on the radar screen. We look for a mixed close with soybeans the upside leader. The forecasts are not wet enough for the bears or hot enough for the bulls.

• Chicago brokers estimate that funds have bought; 5,100 contracts of corn, 3,600 contracts of soybeans while being flat in wheat. Funds have secured 4,400 contracts of soyoil and 2,100 contracts of soymeal.

• China was confirmed to have bought 264,000 mt of old crop soybeans and 202,000 mt of US new crop corn. We hear that 2-3 cargoes of US soybeans have sold off the PNW for September/October this morning.

• A host of Executive Orders and Congressional Bills sit on US President Trump’s desk to sign against China’s aggression via Hong Kong. Traders worry that China could somehow retaliate against the US’s meddling which would further raise US/Chinese political tensions. 40 US trade groups in a letter to Sec of Treasury Mnuchin pushing him to get China to secure more energy and ag goods in coming weeks. US exporters report that China is securing US ag goods, but not at a pace that will allow them to reach their Phase One Commitment.

• The US FAS Weekly Export Inspection report has been delayed for technical difficulties and will be released later this afternoon.

• Brazilian farmers have completed 25% of their winter corn harvest with yield trends holding well above expectations. The high yields have traders discussing a total Brazilian corn crop of 104-108 million mt. Most expect that CONAB and USDA will be raising their Brazilian corn crop estimates in the months ahead. Brazil is likely to export record tonnages of corn of 38-40 million mt.

• Russian interior wheat/flour prices are in sharp decline as the 2020 winter wheat crop harvest gains speed. So far, yields have been below producer expectations which has renewed talk of a Russian 2020 all wheat harvest of 75-78 million mt. Russian exporters can now secure wheat in the interior at prices below fob export values. However, the ship line-up for export remains dismal with just 2 boats loading this week. Russian wheat prices will not seasonally bottom until there is a noticeable rise in export sales/loadings.

• The midday GFS weather forecast is slightly wetter and less threatening with a high-pressure ridge during the 10-15 day period. Midwest storm activity will be featured daily into next Tuesday. The best rain chance is late week with a frontal pass across the Midwest. A rich source of gulf moisture along with afternoon heating will produce showers/storms including “Ridge Riding” rains. None of the rains are projected to be heavy, but daily amounts could add up to 0.35-1.25″.

• The mean position of the ridge has shifted west, a trend that we think will be furthered in coming runs. The best nearby rain chances will be across the N Plains and the W/N Midwest, with reduced totals in the SW Midwest/Plains. The 10-15 day period has a less amplified ridge that is further west compared to the overnight run. A ridge west/trough east pattern favours Midwest rain.

• It is a game of weather musical chairs in Chicago. The outlook for US grain demand is dismal with export sales in retreat amid cheaper fob offers from others. US corn ethanol producers are back to break even margins, while US livestock farmers struggle with negative feed margins. The point is that the Chicago rally is supply driven via adverse weather. If the US weather pattern improves, there won’t be enough chairs for the bulls to sit down on.

• Chicago futures are lower at midday on less threatening Central US weather and profit taking following several days of fund short covering gains. Other than short funds, end users nor exporters are willing to chase the Chicago rally with crops growing and improving in the fields. We look for Monday’s NASS Crop Condition and Progress report to reflect steady to a 2% improvement in good/excellent corn and soybean ratings. As of today, summer row crop yield potential is high with above trend line corn/soybean yields forecast.

• FAS/USDA confirmed that China booked 126,000 mt of US 2020/21 soybeans and 202,000 mt of corn. The sales were said to have been made late last week and announced today. It was hoped that China would be buying 1.5-1.7 million mt of US soybeans per week. Markets are disappointed by China’s purchases of US crops to date. However, there remains time for China to pick up the pace heading into the end of the year to reach Phase One targets.

• Russian, European and Ukraine Black Sea ports are witnessing a sharp reduction in vessels arriving/loading in July. The trend could be related to Covid-19 demand destruction or that French/Russian and Ukraine farmers are being tight fisted with their new crop harvest. We will follow the vessel loadings, but a just a year ago, Russia exported 8 million mt of wheat in July/August which is unlikely to be achieved this season. There is no doubt that there is a drag in world wheat and corn demand during July amid the Covid-19 and economic uncertainty.

• The midday GFS weather forecast is wetter with convective storm activity on almost a daily basis after the long holiday weekend. A rich source of gulf moisture along with afternoon heating will produce showers/storms. None of the rains are projected to be heavy, but over the next 10 days could add up to 0.3-1.25″ helping to maintain high corn/soybean condition ratings.

• Also, the mean position of the ridge has shifted west, a trend that we think will be furthered in coming model runs. The best rain chances will be across the N Plains and the W/N Midwest, with reduced totals in the E Midwest.

• High temperatures will range from the mid 80′s to the mid 90′s from Sunday into Thursday before retreating by 4-7 degrees. A decline in temperatures will allow rain chances to increase. The 11-15 day forecast starts with a Plains ridge, but ends with its compression southward and cooler temperatures/increasing rain chances.

• An acute focus on Central US weather will direct Chicago prices in coming weeks. Today’s midday forecast is more hopeful for Midwest rainfall next week. This is not a set up for a lasting period of extreme Midwest heat/dryness. More likely is warmer than normal temperatures and at least near normal rain that would allow crops to hold their high yield potential into the autumn. Our expectations for 2020 US corn and soybean yields are near to above trendline.

• Chicago futures are deeply in the green on Wednesday as funds are aggressively add to their soybean long and exit their corn short. December corn rallied above a key downtrend line that crosses at $3.56-3.57 which fuelled additional chart-based buying. Chicago corn, soybean and wheat all hold a strong tone in midday trade with corn the upside leader on fund short covering. A higher close is expected if the midday weather models follow their overnight trends.

• The US farmer has been a big seller of old crop corn stocks this morning with Midwest elevators reporting their best movement of the year, US farmers were hoping that July corn would reach $3.45-3.55 and sold aggressively this morning. Cash sales of old crop soybeans has been much more limited with farmers having sold most of their stored supply already. Midwest farmers are targeting some clean up sales at $9.00 or above basis July futures.

• Chicago brokers estimate that funds have bought 28-32,000 contracts of corn, 9-10,000 contracts of soybeans, and 2,200 contracts of wheat. In the products, funds have bought 5,500 contracts of soymeal and 2,100 contracts of soyoil.

• Research estimates that funds could be nearing a net 200,000 contracts net short corn position by the close today with their soybean long close to 56,000 contracts. Funds hold a sizeable net short in Chicago wheat.

• The reason for actively updating fund positioning is that end users/importers are unwilling to chase corn/soy values higher. They know that harvest is ahead and see no reason to panic and make purchases on the speculative bulge. Thus, when the funds have cut their net short corn position down to 50-100,000 contracts, the Chicago rally will be nearly completed.

• The EIA reported that the US consumed 265 million gallons of ethanol for the week, up 2 million gallons from last week, but well below the 295 million gallons that is required to meet the USDA annual forecast. The downturn in US gasoline consumption was a surprise last week and offers confirmation that the new spikes in Covid-19 cases had an adverse impact on US miles driven. The Chicago corn rally has pushed US ethanol margins to even or slightly red levels. A continued rally in Chicago corn futures would further slow the grind.

• The midday GFS weather forecast is cooler in the next 5-6 days with Midwest high temperatures in the upper 70′s to the lower 90′s with 80′s to upper 90′s in the Plains. Any showers will be finishing today with general dryness over the fat areas of the Plains and Midwest into early next week. A high-pressure ridge will act to limit rainfall with the next chance being across the Northern Plains and the Upper Midwest.

• A 5.94 milibar ridge sets up across the Plains/Midwest from Friday July 10 and lasts into Monday July 13 producing upper 80′s to upper 90′s high temperatures. This is the warmest period of the forecast with a cool front to produce showers/storms into mid-July. A more normal Central US weather pattern is offered as the blocking over Europe ends. We doubt that the Central US is facing a lasting/devastating drought.

• Fund short covering in corn is likely to persist into the US holiday weekend. A 50% of the December corn decline is $3.63 with the next upside target being $3.70-3.74. November soybeans upside targets is at $9.03-9.12 while Sept Chicago wheat stalls against $5.00-5.05. A few warm/hot and dry days are a concern, but we do not see a lasting dire Midwest drought.

• The USDA Crop Report was bearish on stocks, but the bullish shocker was seedings as total 2020 US 8 crop seeding declined 6.72 million acres. The decline was based in corn where seedings fell 5 million acres to 92.0 million acres. This was 3 million acres more than the average trade estimate. The FSA Farm Service crop data now becomes important as analysts try to understand why US farmers did not plant nearly 7.0 million acres with improved spring weather.

• NASS estimated 2020 June 1 corn stocks at 5,223 million bu, up 22 million bu from last year with the March-June feed residual estimate at 813 million bu, down 303 from 1,116 million bu last year. The June 1 stocks were up 234 million bu from trade expectations.

• US wheat stocks at 1,044 million bu were 65 million bu larger than expected (fall in feed/residual use) while US soybean stocks at 1,386 million bu where 5 million bu larger than forecast. The US corn stocks total was a bearish surprise.

• March to June 8 crop US seeding changes were down 6.72 million acres, which is larger than last year. A year ago, NASS indicated that the extremely wet spring pushed farmers to seed just 6.0 million acres less than the March Intentions.

• This is where the confusion begins in relations to NASS. A year ago, NASS overstated US crop seedings relative to trade expectations a record amount while this year was a record large miss under trade estimates. Trying to understand or explain where all the acres went is difficult.

• NASS estimated 2020 US corn seeding at 92.0 million acres, a record miss vs trade estimates at 95.1 million acres. North Dakota corn seeding was down 800,000 acres while IL/SD was off 400,000 acres. NE corn seedings were 700,000 acres. Other states add up to the combined miss of nearly 5.0 million acres from the March Intentions. Assuming trend line yields 178.5 bushels/acre on the lost acres adds up to around 850 million bu of US corn production.

• Research notes that US 2020 soybean seeding expanded by 300,000 acres to 83.8 million acres while US all wheat acres were pegged at 44.2 million acres, down 500,000 from intentions. Lost US corn acres were expected to be planted to soybeans, but somehow producers either enrolled those acres in the Prevent Plant program or left them lay idle.

• Where do the reports leave the US stocks. WASDE is likely to cut 2019/20 US corn feed/residual by 150-175 million bu in July and make a like adjustment to the 2020/21 feed/residual for a combined 300-350 million bu cut to domestic use.

• However, USDA’s corn seeding estimate cuts 850 million bu off supplies which means that 500-550 million bu will be cut from 2020/21 US corn end stock estimates which look to drop US 2020/21 corn end stocks to a large 2,800-2,850 million bu. Such stocks would justify December corn trading in a range of $2.90-3.60 assuming trend line yield. Remember that every 1 bushels/acre above or below trend adds or subtracts 85 million bu to US corn stocks.

• 2020/21 soybean end stocks are forecast at 425-475 million bu as US seedings did not expand on corn’s loss. While 2020/21 US wheat end stocks will rise closer 940-960 million bu, which is more than adequate.

• The USDA Seeding report is hard to explain in that a year ago with horrendous cool/wet spring weather the US lost 5.6 million acres from intentions and this year the loss was 6.7 million acres with okay conditions. The report was a bullish corn shocker, but we doubt that US farmers were able to enter all those acres in Prevent Plant. Our longer-term view stays bearish, but less so than before the report on the decline in US corn/soybean seeding.

• Last week saw grain prices fall (as we reported) amid upgrades in crop forecasts, harvest pressures and ongoing Covid-19 demand cut fears. In addition the funds added to short positions. We have now seen a further cut in EU wheat output as forecast by the EU, 4.3 million mt down to 117.2 million, which is now 7% below average. That said, global production continues to grow according to the IGC who pegged 2020/21 output at 768 million mt, up from 762 million in 2019/20. EU woes are being offset by improved prospects in China and Australia continuing the theme of abundant global supplies. Prices are expected to remain pressured however as the threat of Russian export quotas from January 2021 could well point towards a front loaded export programme.

• In a reversal of Friday’s price action, corn/wheat futures are higher while soy futures hang in the red amid a concern for an expansion of seeding within Tuesday’s NASS report. The average trade estimate looks for a decline of just over 2 million acres of corn and an increase of 1.8 million acres of soybeans which is working to push traders to cover soybean/com spreads. Wheat is following corn as the US winter wheat harvest pushes closer to being 50% completed. The volume of trade has been active. US farmers are hoping for a bullish report to advance old crop corn sales. Movement last week was one of the best in weeks and most farmers are looking to sweep out their bins. We look for a mixed close with July weather forecasts being closely eyed along with the upgrade to the EU weather model on July 1.

• Chicago brokers report that funds have bought 11,300 contracts of corn and 3,200 contracts of wheat while selling 2,500 contracts of soybeans, in the products, funds have sold 1,300 contracts of soymeal while buying 1,900 contracts of soyoil. It is the coming end of the month and quarter which has some fund managers looking to bank profits.

• Weekly export inspections for the week ending June 25 were; 48.6 million bu of corn, 11.9 million bu of soybeans, and 18.9 million bu of wheat. China shipped out a modest 56,000 bu from the interior. The US soybean and wheat export pace was deemed disappointing by Chicago traders.

• US growers report that their crops have improved following last week’s sunshine, warmth and needed rainfall. The improvement should allow for modest gains in good/excellent ratings as soybean/com crops grow. Normally, corn looks its best just prior to pollination when ratings tend to seasonally start to stabilise or slide. We would estimate a 1-2% gain in good/excellent ratings with corn rising to 73-74% good/excellent and soy 71-72% good/excellent.

• Chinese interior corn prices have risen to the same levels as wheat as the recent weekly auctions have failed to stem corn’s price rise. According to USDA data, China has an abundance of corn and wheat stocks, but much of the supply is under Government control. Potentially, Chinese hog feeders could use feed wheat vs corn, but the key is that China wants to underpin its farm income. China needs a high domestic corn price to underpin its 2020 farm income profile.

• Warm temperatures and hit-and-miss showers will be the theme of the late week and weekend weather pattern across the Midwest. The midday forecast is slightly cooler and slightly wetter than the overnight run. The flow of Gulf humidity remains into the Central US which will fuel frequent afternoon thunderstorms. This is not a weather pattern that will choke off Central US rainfall. However, no organized rains look to drop into Tuesday July 7. The 11-15 day forecast keeps high pressure ridging intact aloft the Plains and W Midwest. Light showers will be widespread across the N Plains and Great Lakes, but rainfall in excess of 1″ will be confined to the eastern Dakotas, MN and pockets of IA.

• A sizeable fund short in Chicago wheat and a near-record fund corn short are being unwound prior to NASS’s stocks and seedings data due at midday Tuesday. Some premium is being added amid concern over a lasting pattern of above normal Midwest temperatures, which will overlap the beginning of corn pollination. Stocks and seedings will grab market attention briefly on Tuesday, but thereafter it is all weather into early August.

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Weekend summary 26 June 2020

• Corn, soybean and wheat futures are lower in midday Chicago trade with December corn falling to a new contract low of $3.24. July corn futures have not scored a new contract low as cash basis strength is underpinning this market heading into first notice day on Tuesday. Funds have been aggressive sellers from the opening on favourable US weather, Covid-19 fear and a worsening economic outlook from the IMF. Chicago either needs to find new demand (China) or a dramatic change in weather to sustain a recovery. We look for a lower Chicago close with the US winter wheat harvest passing the 40% on the weekend. Wheat futures should be supported better than either corn/soybeans.

• July Chicago options expire on Friday with most farmers having to be out of any cash basis or DP contracts by Monday’s close. Selling from July options is noted with US farmers sitting on sizeable amounts of old crop corn/soybeans. US merchandisers report that farmers are waiting/wanting another few good rains before sweeping their bins clean. A pickup in cash related selling is forecast without a dramatic change in the weather forecasts looking forward into mid-July.

• Chicago traders estimate that funds have sold 12,000 contracts of corn, 8,600 contracts of soybeans while buying 2,300 contracts of wheat. In soybean products, funds have sold 2,800 contracts of soymeal while being flat in soyoil.

• The USDA Weekly Export sales report for the week ending June 18 showed 19.1 million bu of wheat, 18.2 million bu of old crop corn and 42.7 million bu of old and new crop soybeans. The wheat sales were better than expected, while corn and soybeans were a touch disappointing.

• For their respective crop year’s to date, the US has sold 251.8 million bu of wheat (down 3.5 million or 1%), 1,652 million bu of corn (down 267 million or 14%), and 1,646 million bu of soybeans (down 103 million or 6%). China booked another 4.7 million bu of US old crop soybeans and 10.7 million bu of new crop. China has now secured a known 15.8 million bu of US old crop soybeans and 125 million bu of new crop. The Chinese purchase pace of US soybeans is disappointing.

• US Sec of State Pompeo will be visiting the EU to hold a session on the transatlantic awakening to the truth of China, and its threat to the world. The session will not be seen favourably by the Chinese. We have no way of knowing as to how the planned EU/US summit will impact the Phase One Deal, but Chicago futures sold off on the announcement. The political rhetoric is likely to grow heading into the Nov 3 US election; A growing worry for the massive demand that is needed by China to fulfill its Phase One Ag Purchase pledges.

• A progressive weather pattern will be maintained across N America. Systems within a strong westerly flowing jet stream will produce showers/storms every 3-4 days. Rain totals from each system are forecast in a range of 0.35-1.25″. The next rain chance occurs from late today into the weekend with a second chance mid next week.

• The 11-15 day forecast has a moderate upper ridge across the Central US, but the ridge does not look strong enough to block moisture chances. More likely is that the ridge will produce summerlike heat with near normal rainfall. A strong upper level trough is evident across the PNW which looks to be dragged eastward by a seasonally strong jet stream.

• A longer term bearish outlook is offered in corn, but this is no place to be making new sales ahead of a key USDA crop report next week. We favour selling material rallies in corn and soybeans. The wheat market is likely in the early stages of forming a seasonal low. Kansas wheat yield data is disappointing across the western half of the state. China is on holiday into the weekend. No new corn or soybean sales were announced this morning. Hopefully, China picks up its buying next week.

• Mixed in a reversal of Tuesday’s price action are Chicago values at midday. Soy/wheat values are weaker while corn bounces on better than excepted US weekly ethanol production. Trade volume is modest as traders do not want to expand their market risk heading into the weekend and next week’s USDA June Stocks/Seeding Crop Report. And firm old crop corn basis bids are underpinning July corn futures. Farmers report that they want another rain before they start parting with stored old corn/soybean stocks. The US farmer has been a slow seller of old crop grain not liking the price amid a spate of June dryness. Should Mother Nature produce another few good rains, US farmers will start the process of sweeping out their bins for the new crop. The calendar is against storing old crop grain beyond the July 4 weekend.

• We doubt that corn, soybeans or wheat can sustain much of a rally amid favourable Central US weather. The long-range Midwest forecast is less certain, but the recent rains and mild temperatures this week will improve growing and crop conditions. A mixed Chicago close is expected with US wheat futures trying to forge seasonal lows while corn confirms seasonal highs.

• Black Sea July/August wheat/barley prices are struggling to decline as shorts are trying to cover or roll forward their July sales. July/August Russian wheat is bid at $205/mt and offered at $207/mt. The Ukraine/Russian winter wheat harvest is just starting, but with the domestic market well above export offers, exporters short wheat for July shipment are going to have to raise bids to secure new crop supply. Russia/Ukraine and Romania are starting the new crop year with exceptionally low carry-in wheat stocks, which will make the transition to new crop difficult. Advice would be don’t be short Russian July wheat!

• The daily Kansas Wheat Harvest report for day 7 indicated a disappointing yield trend for W Kansas. The yield trend is declining as the harvest works north and west. We would trim our Kansas wheat yield by 1-2 bushels/acre accordingly.

• The EIA’s weekly ethanol report was positive which rallied Chicago corn futures following its release. The ethanol data confirmed weekly production of 263 million gallons, which is still below the USDA’s forecast of 295 million gallons needed to reach the WASDE forecast of 4,900 million bu. Research argues that WASDE will reduce its 2019/20 ethanol production forecast by another 50-100 million bu in July. A US 2019/20 ethanol grind of 4,750-4,815 million bu appears right.

• A progressive weather pattern will be maintained across North America. Systems in a strong westerly flowing jet stream will produce showers/storms every 3-4 days. Rain totals from each system are forecast in a range of 0.35-1.25″. The next rain chance occurs from Friday into the weekend with a second chance mid next week and third during the July 4 weekend. The 11-15 day forecast calls a tropical storm system to make landfall around Panama City, FL and push northward into the Ohio Valley. This system would produce heavy rains of 1.50-5.50″ from the FL Panhandle north to northeast into Tennessee/Kentucky and Indiana/Ohio. Our confidence in this Tropical system is low but would grow if its forecast is consistent.

• Central US weather remains the key fundamental impacting corn, soy and wheat prices. The forecast is favourable and US crop sizes are growing. The US looks to harvest a corn crop that will be 2 billion bu more than last year, likely a record. It is the huge size of the US corn crop which will cap rallies in soy/wheat. China is not showing today as a large buyer of US ag goods today which leaves Chicago values in liquidation into the close.

• Mixed at midday is Chicago trade with wheat and old crop soybean futures being slightly higher while corn prices sag on record large US production potential. The 1% gain in good/excellent corn conditions to 72% with future condition gains forecast into mid-July has corn prices under pressure. The 2020 US corn crop has record yield potential with normal Midwest weather for the next 3-4 weeks.

• Soybeans and wheat are firmer on fund short covering and news that China secured 2 cargoes of US soybeans. We hear that those beans were sold last week and that the seller wanted to pull them forward amid the ongoing US/China political brouhaha. The rally in soy and wheat appears to be largely technical in nature with the July/November soybean spread inverting to uncover US farm sales. Cash soybean basis levels are firm nearby with crushers pushing to add forward coverage. November and back end US soybean futures are weaker on the coming abundance of supply and potential for NASS to find 1-3.0 million acres of additional US soybean acres in next week’s Seeding Report. We look for a mixed close with December corn futures closing below key support at $3.39.

• Late last week there was cash connected talk that China was asking for prices on US ethanol and corn. In fact, many argued that China could be releasing 5.0 million  mt of TRQ’s for new world corn imports. Today, those cash rumours are gone. We hear that no US ethanol sold to China, and Asian sources suggest there is no immediate plans for China to issue a new round of corn TRQ import licenses. Remember, that for a private buyer to take US corn requires a GMO import license. China demand for grain and ethanol appears to have evaporated.

• We hear that China is still asking for meat/soy/grain certification from exporters that US ag shipments are tested and Covid-19 free. The science on Covid-19 says such certification requests (by China) are without merit. But China claims that following a European salmon incident last week, there is a means of transmission. The debate is ongoing, and the hope is that science will make China agree. However, the longer this goes on the more China will argue their case. The US ag industry hopes that this gets resolved quickly.

• Because of the recent increase in US Gulf corn prices, Brussels has dropped the import levy to $4.60 €uros/mt from $10.40 €uros. The levy is reviewed month-to-month based on the US Gulf and world corn price structure. As world corn prices decline, the levy will rise to prevent more sizeable feedgrain imports and protect EU feedwheat and maize producers.

• The US$ was under pressure with the €uro rising to $1.138 while the Brazilian Real traded up to 5.16:1. The Argentine Peso fell to 70.04-a record low.

• A progressive weather pattern will be maintained across North America over the next 2 weeks (ending July 9). Short waves in a strong NW flowing jet stream look to produce showers/storms every 3-4 days. Rainfall totals with each system are forecast in a range of 0.5-1.25″ with the best chance for heavy rain occurring across IL, IN and OH.

• The 11-15 day forecast calls for a ridge of high pressure over the SW US with any heat impacting the 4 corner area. This is a different solution from what has been shown previously. The ridge reaches into the S Plains but has no impact on the Midwest. Under this pattern, showers/storms would occur through the Delta/Gulf States with some areas seeing upwards of 4-6.00″ of rain. Midwest temperatures would be near to above normal with near normal rain into July 10.

• Central US weather is the driving price determinate into July. The June 30 Stocks/Seeding Report will have surprises, but without adverse weather, any bullish surprise will be sold. Amid the coming 10 days of warm/wet weather, a turn to extreme heat is needed to adversely impact corn yield. Soybeans are a crop of August, but the risk of trend line or above yield is rising with favourable weather into mid-July.

• Mixed/low volume is prevalent in Chicago trade at midday with corn the downside leader while the soybean/wheat markets trade either side of unchanged. Traders are looking for a decline in US corn/soy and spring wheat crop conditions this afternoon. Traders will likely buy Chicago going home looking for a turnaround Tuesday bounce. How vigorous a Tuesday bounce occurs could provide some insight as to the health of Chicago heading into the weekend. It feels likely that we will see additional selling pressure in corn and soybeans into the end of the week with wheat trying to forge a seasonal low.

• Chicago brokers estimate that funds have sold 4,700 contracts of corn, 2,100 contracts of soybeans, and 900 contracts of wheat. In the soy products, funds have sold 1,500 contracts of soymeal and 1,200 contracts of soyoil.

• US weekly export inspections for the week ending June 18 were; 51.0 million bu of corn, 9.4 million bu of soybeans and 22.5 million bu of wheat. For their respective crop years to date, the US has shipped out 1,260 million bu of corn (down 381 million or 23%), 52 million bu of wheat (up 4 million or 8%) and 1,340 million bu of soybeans. US crop year soybean exports are up 4 million bu or 0.3%. China shipped out just 2.9 million bu of soybeans last week as they continue to take record tonnages of the 2020 Brazilian harvest.

• Confusion is what China has sown in terms of seeking signed affidavits that grain/soy/meat import cargoes are Covid-19 free. Commercial traders argue that it is humans that spread the virus, not raw materials following 60-72 hours. Yet, China new Covid-19 food safety regulations have not been fully explained. It appears that the meat values are being impacted to a larger extent on China’s CIQ (China Inspection and Quarantine) virus free certification with world grain traders hopeful that this new protocol will be ended. However, if by the end of the week there is not an abandon of China’s Covid-19 certification demand for grains, reality will set in of China’s intent in managing its food imports.

• The Brazilian winter corn harvest surpassed 10% this weekend with reported yields being far better than expected. Mato Grosso corn yields are record large while yield losses are less than expected in Parana and RGDS. There is a better than a 50/50 chance that Brazil will equal or set a new total corn crop estimate this year at 102 million mt or more.

• IA/WI has received needed rainfall this morning with showers ongoing. Rainfall totals of 0.25-1.50″ have helped replenish soil moisture with the system to push eastward into the E Midwest overnight.

• A progressive weather pattern will be maintained across North America over the next 2 weeks (ending July 8). Short waves in a strong NW flowing jet stream look to produce showers/storms every 3-4 days. Rainfall totals with each system are forecast in a range of 0.5-2.00″ with the best chance for heavy rain occurring across IL, IN and OH.

• The 11-15 day forecast calls for a trough to pull over the top of a ridge impacting the Upper and Eastern Midwest between July 3-7. A few warm days will be felt between June 30 and July 3, but no lasting extreme heat is projected. The GFS model continues to outperform the EU model (EU model upgrade due on July 1). The Central US forecast is warm/wet which favours well established Midwest crops.

• Central US weather is the “driver” of price with a warm/dry first 2/3′s of June likely to produce a warm/wet late June and early July. US record large corn yields are produced when an early dry June is followed by a wet late June and early July. Amid favourable Central US weather, any Chicago rallies will be limited with a key USDA June Stocks/Seeding report due in just five trading sessions.