AgResource Daily Farm Marketing Advice for Monday: 1/ No new advice.
Low volume and mixed has been the morning CBOT trade. Traders expect that US corn and soybean crop conditions will improve this afternoon and they are willing to wait for additional confirmation of heat after July 4th US holiday with rain in the 7 day forecast. The Midwest warmth does not start until after July 5th holiday. Traders are always suspect of any extended range forecast.
Confirmation of a North American pattern change and better understanding this week’s rainfall will key CBOT price direction into Friday’s USDA Crop Report. As we stated on the AM wire, we look for a general sideways trade this week with breaks uncovering short covering while rallies stall on the rains this week. The market will take a pause digesting the forecasts, 1st notice day and Friday’s USDA Stocks/Seeding report. Our advice is not to sell breaks or buy strong rallies.
CBOT brokers report that funds are net sellers of 2,200 contracts of corn, sellers of 4,600 contracts of wheat, and 2,400 contracts of soybeans. In soy products, funds have sold 1,600 contracts of soymeal and 2,100 contracts of soyoil.
The USDA reported the sale of 110,000 MTs of US soybeans to Bangladesh for the 2016/17 crop year.
FAS reported that for the week ending June 22nd, the US exported 37.9 Mil Bu of corn, 11.6 Mil Bu of soybeans, and 23.1 Mil Bu of wheat. For their respective crop years to date, the US exported 1,870 Mil Bu of corn (up 539 Mil Bu or 40% from last year), 1,918 Mil Bu of soybeans (up 286 Mil Bu or 17.5%), and 82.9 Mil Bu of wheat (up 20.2 Mil Bu or 24% from last year). The US wheat early year export pace continues to be surprise on the upside. ARC research maintains that WASDE is 25 Mil Bu too low on 17/18 US corn/soybeans exports.
World feed wheat is in reduced supply availability and offered well above world corn. South Korea tendered and purchased 418,000 MTs of corn on the weekend in a testament to reduced world feed wheat supplies and its higher price relative to corn. A year ago, it was feed wheat that captured at least 11-13 MMTs of additional world feed demand. This year, world corn trade will benefit from its cheaper price levels and the higher price of wheat.
The CBOT will be closing next Monday at noon for the July 4th holiday. The next opening won’t occur until Wednesday AM July 5th. Note that NASS will release their weekly crop condition and progress report on Wednesday PM July 5th. The reduced trading opportunity could magnify any US Central US weather change after the US July 4th holiday.
It looks like another week of declining crop prospects with above normal temps and below normal rainfall to persist in W Russia and Ukraine. China has some areas of regional dryness while Australia is dry for another 2 weeks.
Midday GFS Weather Model Update: The midday forecast is similar to the overnight solution with heavy rains slated to fall across MO, S IA and C IL into July 4th. Rainfall is this area could range from 1.5-3.0” with the rest of the Midwest seeing rainfall of .4-1.25”. The Northern Plains will see rains across their far eastern crop areas, but totals will not be enough to reverse drying soil moisture. The heat is expected to return after July 5th as the Ridge in the Western US progresses east. A few days of extreme temps in the Plains are expected, but its difficult to assess whether the heat and reduced rainfall pattern will linger beyond mid July. ARC does see the below to much below normal temps coming to an end. The models continue to argue for July and August being above normal in temps with the Plains and W Midwest being drier than normal. 10-day precip is below.
AgResource Market Comment: It’s no place to put on a new short with the summer and Central US weather patterns in flux. ARC maintains that unlike recent years, there will be weather scares in July and August that offer new selling opportunities. Longer term, corn & soy are caught in broad trading ranges with the wheat having some upside potential.
