** Reduced cash connected selling from South America and the US farmer has allowed CBOT grain/oy prices to rise as funds remain on the buy side of the marketplace. CBOT values are adding weather premium to price due the persistent trend of below normal rainfall and above normal temperatures across much of the Plains and the W Midwest. ARC would note that the US model remains erratic beyond the next 5-6 days. And the more correct EU model results are not expected to be out until after the 1:15 CBOT close. ARC looks for a stronger CBOT settlement, but the real “fireworks” will not be offered early next week if the major weather models don’t offer a pattern change. US corn and soybean crops are rapidly running out soil moisture and are in need of a immediate rain quickly to maintain their current condition.
** CBOT floor brokers estimate that funds that funds have sold 4,000 contracts of wheat, but bought 8,000 contracts of corn, and 7,000 contracts of soybeans. In soy products, funds have bought 5,300 contracts of soymeal while being flat in soyoil. Funds were early sellers of soyoil and have turned buyers at noon.
** FAS reported that the US sold 143,000 MTs of corn was sold to Mexico. China has also been a buyer of July soybeans out of Brazil and are asking for offers for August.
** The USDA reported that for the week ending June 29th the US sold just 5.5 Mil Bu of corn, 13.6 Mil Bu of wheat, and 13.4 Mil Bu of soybeans. Weekly soymeal sales were 45,100 MTs while soyoil sales were 6,600 MTs. The US sales pace was seasonally slow, and it is not expected to improve amid rising CBOT values. The marketplace will pay homage to its slow new crop sales pace once the size of the ‘17 US soybean and corn crops are determined by the September NASS report.
** Canadian sources are reporting that the dire drought of the Northern Plains is not only spreading south and east, it’s also spreading north! Acute dryness over the past month is really starting to take a bite on Canadian crop prospects with spring wheat, durum wheat and canola in the reproductive phase. The forecasts offer limited rain chances over the next 10 days. ARC expects that we are at a point where Canadian crops start getting knifed lower similarly to crops in the Dakota and the US Intermountain West.
** The US dollar is putting its best performance in weeks as the US economy continues to rapidly add jobs. The US added at much better than expected 222,000 jobs during June taking the US unemployment rate to 4.4%. The US GDP rate should strengthen to 2.5-2.7% during the last half of the year which will spur the US Central Bank to raise its lending rate another .25%. The US FED will continue to raise rates well into 2018 to normalize US interest rates with the expectation of another 2-3 rate hikes. The increase in US lending rates should help maintain a strong US dollar!
** Midday GFS Weather Model Update: The midday forecast is wetter/cooler than the overnight run for the Plains/E Midwest with mean position of the Ridge positioned farther west and a deep low pressure Trough drops through the Lake States. Our confidence in this deep Canadian Trough is low as its far different than its overnight run – and the EU model solution. The GFS has a Trough where the EU model had a hot/dry Ridge? We are disregarding the midday GFS based on its poor track record and would tell clients only to pay attention to its forecast for the next 5 days. Like Monday, CBOT prices are retreating on its release, but we suspect that the market is overdoing the amplitude of the long range features and the forecast will likely be wrong. A tropical system crossing into FL in the 11-15 day period is helping to cause the GFS model “forecast fits!”
** AgResource Market Comment: The midday GFS is cooler/wetter for the E Midwest. Limited rains are expected through the Plains/Canadian Prairies. The EU midday model forecast but won’t be available until after the CBOT close. Our bet is that warm/dry weather will persist into late July, and we are not prepared to advise new sales.
