Grain Comments  - 07-19-19

Good Afternoon:

Corn futures closed 6 cents lower today – helping offset at least some of the sell-off, but CU still fell 23 cents this week. Funds were buyers of 12,000 contracts at mid-day and held an estimated long position of 156,000 contracts to start the day. Lack of selling interest into the weekend and thin trade helped lend some support today. Very hot weather this week in most of the corn belt failed to garner much interest as it’s expected to break this weekend. Crop conditions are expected steady/slightly better on Monday – somewhat surprising considering this week’s weather, but the improvement will most likely be in the western belt. USDA officials spoke this week regarding the August S&D and the amount of data that would go into their acreage and yield calculations that will include FSA acreage certification as well as satellite data. They also referenced the issue of corn planted on prevent plant ground and estimating acreage harvested for grain. Lack of objective yield data was dismissed as being problem regarding a yield forecast as August is never a good month for exact information. Takeaway from this is whatever is issued in the August S&D, be prepared for additional meaningful changes. Talk this week resurfaced regarding corn acres dropping 7-8 mln. acres from current USDA reportings.

Soybean futures closed 20 cents higher today as short covering and talk of China buying U.S. beans lent some support. Funds were estimated buyers of 20,000 contracts mid-session, and if so would have cut their estimated short position in half. China reportedly buying 15-17 cargoes of Brazilian beans and 7-8 cargoes of Argentinian beans reflected their continued need for supplies and helped push ideas they were in the U.S. market for possible Aug/Sept needs and/or Dec/Jan needs. U.S./China trade talks, at least on the surface, appear to be going nowhere so soybean purchases would be outside normal channels. At the same time there were wire stories today regarding lower protein content in Brazilian beans this year and the possible problems this might pose regarding exports to China. Problem is that even at lower protein they most likely are higher protein than U.S. offerings. Brazil’s Safras estimates 19/20 production at 123.8 MMT vs. 118.2 MMT this year. As with corn, the market is following changes to U.S. acres and yield, with 2-3 mln. acres of prevent plant back on the table – issue is how does this fit in current USDA projections in the July S&D vs. the upcoming August S&D? 

Have a Safe Weekend

Wayne Kollis - Melissa Peters - Mike Rosenberg - Matt Zeman - Austin Behrendsen