AgResource Daily Farm Marketing Advice for Thursday: 1/No new advice.
CBOT futures at midday are firmly in the green as the US weather forecast maintains warm and dry weather in the 6-15 day period (vs. cool-ish and wet weather during this time a year ago) and as Stats Canada acreage data this AM suggests rationing US spring wheat supplies will be more difficult than expected. The US dollar has found new 9-month lows, crude is up slightly, and ahead of what is essentially a 4-day weekend, position squaring is noted.
Stats Can pegged Canadian spring wheat planted area at 6.39 Mil Hectares, down 353,000 from its April report. Winter wheat and durum seedings were raised slightly, but total Canadian wheat area is down 311,000 hectares, and amid dryness concerns across Saskatchewan ARC pegs Canada’s wheat crop at no better than 26-27 MMTs, vs. 32 MMTs last year, and so the N American high protein wheat balance sheet continues to tighten.
Spot Minneapolis is up 45 cents at $7.50, but with fob prices in Canada at $265-285/MT, we doubt this price really solves the market’s supply issue. Next resistance is pegged at $7.75-8.00, but until yield is fully known upside risk remains. Note that this week’s drought monitor expanded severe drought conditions across the Dakotas and Montana, and very little rain is in the forecast there through the next 5-7 days. European wheat futures have followed gains in the US, and higher world cash markets are anticipated this evening.
Stats Can raised oilseed acreage slightly, and record Canadian soybean exports worth 6 MMTs are likely if E Canadian weather stays favorable.
US export sales were mixed – soybean sales were decent, wheat sales were within expectations, while new demand continues to struggle as cheap South American supplies enter the global pipeline. Through the week ending last Thursday, the US sold a net 12 Mil Bu of corn, vs. 21 Mil the prior week. Wheat sales totaled 18 Mil Bu, down 2 Mil on the week but some 3 Mil above the pace needed to meet the USDA’s 17/18 target. Bean sales totaled 11 Mil Bu, vs. 4 Mil a week ago, as the US Gulf is rather competitive against S American origin through summer. The USDA is nearly sure to raise its soybean export forecast 25 Mil Bu. Our work suggests old crop corn exports need to be raised a like amount, but it’s less clear whether the USDA will judge S American corn export commitments in the next few weeks before making any adjustment.
It’s all supply! And whether the 8-15 day forecast materializes as projected. The issue over the 4th of July break will be whether operational models extend warmth & dryness into the latter part of the month, or if yet another pattern change lies ahead. ARC estimates that, as of today, managed funds are net short 85,000 contracts of corn, 30,000 contracts of Chicago wheat and a near record 103,000 contracts of soybeans.
Midday GFS Weather Model Update: The midday GFS is, overall, warmer and drier in mid-July. The model expands a high pressure Ridge beginning next week and at times this Ridge will inch into the heart of the Midwest July 11-14. Confidence in the details is low, but if the GFS fully verifies high temps will reach the 90s and low 100s as far east as MN and W IA in the 11-15 day period. Such readings will be common across the Plans. The E Corn Belt will be more temperate, but the model lacks meaningful rain beyond the next 5-6 days. Max temps on July 14 are attached.
AgResource Market Comment: No new sales are advised as world wheat futures & cash prices surge higher, and as the most critical part of corn’s growing season lies ahead and there’s a substantial risk of sustained excessive heat across KS, NE and the Dakotas.
