Ag markets are trading lower with corn down 8, beans down 4 and wheat off 6 to 8 cents. Technical selling and concerns over a bearish report from the USDA on Thursday have prices on the defensive to start the day. The funds are long almost 200k contracts of corn so a little profit taking following the last week’s recovery is not a huge surprise.
With 96% of the beans now planted according to the USDA, the trade will refocus its attention to crop conditions and how the wheat harvest is progressing. Wheat harvest is now 47% complete. Crop conditions still look good with 64% of the winter wheat crop rated Good-To-Excellent (GTE). Unsurprisingly corn gained 1% to 57% GTE while beans pulled back 1% to 53%.
Despite the potential for new business from China when and if trade negotiations pan out, the trade continues to struggle to rally back to pre-trade war price levels. A big part of that is the ongoing African Swine Flu (ASF) problem that has government officials culling animals. Additionally, the expansion of Chinese domestic production of soybeans just exacerbates the problem of the expanding stockpile of world supplies. Both are a direct result of the trade war and are likely to have lasting implications on just how much the Chinese will need to secure. The ASF has helped to encourage their population to seek out other types of proteins like beef. Likewise the increase in bean acreage over there will decrease their dependency on the US for soy.
The weather models are in fair agreement in calling for a tropical system to move out of the Gulf and over the Delta and Southeast for the next 7 to 10 days. The system looks like it will trek further east than we had seen in previous runs and bring meaningful rains to the Delta up through Illinois and Indiana. Beyond that it looks like we will see a return to more normal summer weather. Latest longer-term runs show no set up that is too threatening. We may get some ridging developing beginning around the 18th that could have temps across the Midwest heating up into the lower 90’s, but nothing that looks to be too strong.
Have a Safe Day!