AgResource Daily Farm Marketing Advice for Wednesday: 1/ No new advice.
It has been another mildly green session, with corn, wheat and soybeans up 2-4 cents at midday. Spot soy oil continues to flirt with multi-month highs following last week’s June biodiesel production number and as more talk circulates surrounding the potential of lower than expected oil yield based on this year’s cool finish to the growing season. Crude has joined the rally and is up $.80/barrel, while the US dollar is again testing 92 points, below which little support exists down to 90 or so. Macro markets remain supportive.
In its daily release, FAS announced that US exporters sold 253,300 MTs of corn to Mexico, and enlarged Mexican interest is expected to continue as US and Brazilian fob offers are at parity with one another though autumn – and the US of course holds a decent freight advantage there.
CONAB in Brazil this AM also projects first crop corn seedings to decline, which is not surprising given very weak interior cash prices there. Cotton & soy acreage is forecast to expand modestly. Note that cash corn in Parana (a major producer of both 1st and 2nd corn) this morning rests at $100/MT ($2.55/Bu), vs. $160/MT ($4.10/Bu) on this week a year. Strength in Brazil’s currencies has exacerbated losses at the CME.
Stats Canada also published its July 31st stocks report, which included all-wheat stocks of 6.9 MMTs, vs. 5.2 MMTs a year ago, and canola stocks of 1.3 MMTs, vs. 2.1 MMTs. These numbers are generally in line with USDA’s annual balance sheets, but also confirm year-ending Canadian canola stocks will be a very tight 200-250,000 MTs. Some degree of canola rationing will be needed in Canada this year, and the market’s premium to soybeans, $50-55/MT, persists. Note also that the Canadian dollar has posted new 2-year high this morning.
Census US corn exports in July totaled 186 Mil Bu, a bit higher than expected, and assuming weekly FGIS data is close to accurate final US corn exports in 17/18 look to reach 2,275-2,300 Mil Bu, up 50-75 Mil from the USDA’s forecast in August. July soybean exports totaled 136 Mil Bu, also a bit higher than expected and which suggest the USDA’s soy export forecast is also too low. Soy shipments in August should be the largest since February.
Midday GFS Weather Model Update: The GFS and National Hurricane Center agree that Irma will impact South Florida early next week and then travel northward along the coasts of GA and the Carolinas. There are still indications that moderate rainfall (.50-1.00”) will reach into KY & TN next Wed/Thurs, but otherwise the Central US will be completely dry into Sep 18th. A few rather cool mornings lie in the offing, followed by a relatively warmer trend thereafter into late Sep. No hard frost is indicated but GDD accumulation in the next two weeks will rest at just 83-90% across WI, IL, IN, OH and MI.
AgResource Market Comment: It’s another macro-themed day, aided a bit by further soil moisture loss into the end of the growing season. Whether lasting bottoms have been scored will hinge upon the direction of yield updates in next week’s WASDE, and ARC’s opinion is that one has to wait on actual combine data before there’s any real clarification on US crop size. We do mention that South America’s corn market bottomed in late July, and Black Sea wheat prices have stabilized as harvest there surpasses 60%. We remain neutral.
