Market Wrap

Wheat, corn and soybeans stronger largely on fund buying.  Weather forecasts point to ongoing wet conditions through the US Northern Plains, Canadian Prairies which will further hamper late planting.

European weather pattern is wetter which will help to stabilise winter crops.

Weekly US ethanol production was at a 10 week high and points to an upward re-adjustment in the USDA ethanol production forecast. There is no sign of old crop rationing there.

Informa forecast US winter wheat production at 1,421 Mil Bu, vs. its forecast of 1,441 Mil Bu in May and the USDA’s projected 1,424 Mil. HRW production is estimated at 764 Mil and SRW at 422 Mil. They forecast EU wheat production at 135 MMT.  The HRW production implies a yield of 35.5 bpa and the SRW at 62 bpa. Other forecasters have the US winter wheat production below 1.4 bill bu with lower yields in the Southern Plains and losses in the SRW due to the flooding in the southern Midwest.

• Corn - Dec corn did hit new contract highs on Thursday and is now poised to break the $7 level. Weather in the eastern corn belt has allowed rapid planting this week. Managers and merchandisers say  60-80% of the corn crop will be planted by Sunday in Ohio and 80-90% should be complete in Michigan. Basis is still very strong across most of the corn belt although there are several reports of truck lines in the central/western belt as farmers and elevators clean out bins to evade the inverse and reward the strong basis.          

• Wheat - From Friday’s high to Wednesday’s low, July wheat futures lost 73 cents and perhaps more significantly, wheat became much more competitive with corn for feed. So a correction on Thursday was really more technical in nature than anything else. Informa did come out with a slightly lower US wheat production number of 1.421 billion bushels, and they lowered EU production by 5.4 MMT from the previous estimate due to the ongoing drought conditions in several parts of Europe.  SRW yield and quality reports in southern areas are generally very good, and while there are some concerns about quality in the wetter parts of the Midwest, most traders are still confident that the crop we’ll harvest in about a month will be quite good.    

Australian old crop prices continue to lag as demand into most destinations remains tight and export container business slows due to higher Australian Dollar and south east Asian buyers looking for lower values. The reopening of Russian export program from 1^st July has pressured the market although offers out of this region don’t seem to be as low as many expected and this could bring buyers back to the table for Australia wheat which could in turn help stabilise values here.