TFM Midday Update 7-3-2024

CORN

The eastern corn belt is expected to receive moderate rains and average temperatures over the next week or more. As these have been some of the drier areas, this may limit any upside rallies in corn futures. While the northwestern corn belt currently has flood warnings in many areas, the extended forecast looks drier for that region.
Managed funds remain heavily short the corn market at an estimated 310,000 contracts – without a shift in fundamental factors (including more severe weather) they won’t have reason to cover their positions. This is likely to keep pressure on the market for now.
Argentina’s grain exchanges, as well as private estimates, still project their crop between 45-47 mmt. This is well below the USDA’s 53 mmt figure. The same can be said for Brazil, in which CONAB is estimating a 114-115 mmt crop compared to the USDA at 122 mmt.
Grain markets will be closed tomorrow for the Fourth of July holiday, and will not re-open until 8:30 AM central time on Friday. Without any night trade on Thursday, Friday morning could potentially show more volatility if there is any shift in the weather or big news headlines.

The USDA reported private export sales of 110,100 mt of soybeans for delivery to the unknown. Of that total, 55,100 mt is for delivery during the 23/24 marketing year, while 55,000 mt is for 24/25.
On a bearish note, US new crop soybean sales total only 1.2 mmt so far. This is well below the pace of the past several years, and so far Chinese demand has been lacking.
August soybean oil closed yesterday at the highest level since mid-April, and it is trading higher again at midday today, offering support to soybean futures. Higher veg oil and crude oil prices are supportive as well.
There are reports that Indonesia will impose a 200% tariff on Chinese goods, which may result in China reducing their purchases of Indonesian palm oil in retaliation. Currently that is just speculation, but if true, may lend support to US soybean oil.
September soybeans on China’s Dalian exchange were up on Wednesday by 1.3%, around the equivalent of $14.91 per bushel. With US soybeans priced significantly lower, this in theory could lead to more Chinese purchases of US beans.

At midday Chicago wheat is neutral to mixed, while Kansas City and Minneapolis futures are trading lower. While there will be some rains in both HRW and SRW wheat areas over the next few days, these should not significantly affect the winter wheat harvest. As a result, harvest pressure may continue to affect the market.
Drought is said to be expanding in the Black Sea region, with expected temperatures in the 90s and 100s that could affect yields of Russian spring wheat.
Sov Econ is reported to have raised their estimate of Russia’s wheat crop by 3.4 mmt to 84.1 mmt. For reference the USDA is at 83 mmt, in line with most private estimates that fall around the 80 mmt area.
Paris milling wheat futures closed lower yesterday and are down again at midday today. The front-month September contract has broken below support at the 200-day moving average, which may keep US wheat under pressure today.
On a bullish note, the US Dollar Index is sharply lower. At the time of writing, it is down 0.55 at 105.17. This may take some weight off the shoulders of the wheat market, if its trend remains lower.

Brandon Doherty