** CBOT values have traded deeply in the red at midday as traders ponder the coming rains, its impact on the ’17 US corn and soy crop, and what portion of last week’s buyers have turned sellers this AM? The farmer has halted his cash sales, seeing his/her crop conditions decline. Fund managers are seeing corn and wheat values settle back to last week’s break out point. Our bet is for lower CBOT closes today, but that there will be some sort of recovery going home as traders position for a turnaround Tuesday. US crop condition ratings are expected to decline this PM.
** CBOT brokers report that funds have sold 15,000 contracts of corn, 7,000 contracts of wheat, and 4,800 contracts of soybeans. In soy products, funds have sold 4,700 contracts of soymeal, while being flat in soyoil.
** After a historically dry first half of June, its paramount that rain falls in abundance in some of the drought stressed areas. In producer calls this AM from IL, IN, IA, SD and MO, they report that corn has been rolling tight to slow growth and preserve moisture. Remember that when corn rolls tight for 4-5 consecutive days, yield losses can approach 10%. With rains to hold off until late week across the E Midwest, acute stress will continue for corn with soybeans struggling to germinate amid low topsoil moisture.
** The USDA reported that 130,000 MTs of corn was sold to an unknown destination for the 2016/17 crop year. The sale was initially reported as soybeans, and then corrected to corn.
** US weekly export inspections were better than expected at; 40.9 Mil Bu of corn, 28.4 Mil Bu of wheat, and 18.6 Mil Bu of soybeans. For their respective crop years to date, the US has exported 1,784 Mil Bu of corn (up 558 Mil Bu or 46%), 1,895 Mil Bu of soybeans (up 286 Mil Bu or 18%, and 31.6 Mil Bu of wheat (up 8.8 Mil Bu or 38%). The wheat crop year is in early days and statistical sales comparisons are likely to widely vary week to week. ARC maintains that WASDE is too low with their 2016/17 soybean and corn exports by 25 Mil Bu.
** There are rumors that the US Dept of Commerce is getting close to announcing punitive duties against Argentine soyoil and Indonesian palmoil bio diesel imports in a US antidumping case. Import duties are expected to be 25% and will be enacted by Aug 21st. ARC cannot find any confirmation of media reports that a deal has been cut that would include biotech fees to be paid by Argentine farmers that would pave the way for duty free bio diesel vegoil imports?
** Dry and warming weather is forecast for Western Europe over the next 2 weeks which will catch the winter grain crops during the reproduction phase. The heat and dryness will be adverse and cause some reduction of yield. Ukraine and Polish farmers have been suffering from a lack of rain, but there are hints of better moisture starting early next week. Our confidence in this rain is low.
** Midday GFS Weather Update: The GFS at midday is drier in its 10-14 day forecast that was offered overnight across IL, IN and the N Plains. There is only one chance of rain for the N Plains over the next 2 weeks, so the rain that falls in the next 36 hours is extremely important. Note that the developing Ridge/Trough pattern will produce limited rain for the Plains and thed W Midwest over the next few weeks. Rainfall of .5-2.50” is expected for the C and E Midwest starting late week, but ARC maitnains that the GFS forecast is too wet when compared to the EU/Canadian solutions. There will be areas that see good moisture, but others will be short changed. The heat and dryness is expected to return to the Central US after June 24th.
** AgResource Market Comment: End users need to look at this break as a buying opportunity in corn/spring wheat. ARC doubts that the weather rally has ended, it’s just a normal correction as Central US weather waxes-and-wanes. Our bet is that there will be other hot/dry episodes that cause a new yield worry. A 5% US corn yield decline is 162 BPA with a 10% yield decline calling for 155 BPA. Weather to date leans against trend ine yields in the US corn/wheat.
** 10 GFS Rainfall Forecast:
** 10 Day Rainfall Change from Overnight Forecast:
