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Mixed Grains

Morning Outlook

Grains are mixed. SX is up 2 cents and near 9.22. CU is down 1 cent and near 3.40. WZ is unchanged and near 5.35. KWZ is down 2 cents and near 4.53. Key to corn and soybean prices is perception of damage to US crops due to dry August. Funds continue to buy soybean futures and reduce corn short. US Dollar is higher.

Chinese Ag futures (January) settled down 35 yuan in soybeans, up 14 in Corn, up 19 in Soymeal, down 8  in Soyoil, and down 48 in Palm Oil. Malaysian palm oil prices were up 9 ringgit at 2,623 (basis November) at midsession supported by firmer soyoil and crude oil prices.

The 6 to 10 day forecast for the US Midwest has not changed with both models indicating fairly healthy rains to fall in all of the region. Temps will be above average the rest of this week and into the weekend then, fall to below average the first half of the week and remain there for the rest of the week.

The 11 to 16 day forecast for the Midwest has a bit less than average rainfall for the region and below average temps. Temps may be flirting near 32 degrees in far northern sections of the Midwest by the end of the period.

Rains will begin to affect the Delta from Hurricane Laura later today and into tomorrow with the heaviest rains looking to fall west of the main growing regions but, growing areas of eastern LA, eastern AR, and western MS may see some moderate to good rainfall amounts. The 6 to 10 day returns with light to moderate rainfall for most of the region.

Trade will be watching for any new US soybean/corn sales to China. US ethanol production has been running 9 pct below last year. Stocks are down 13 pct from last year. US gas demand remains below pre Covid levels. This is reducing demand for ethanol.

China new crop US soybean export commit was near 17.8 mmt plus recent purchases of 1.6 mmt. China has also bought 6.5 mmt US corn and 1-3 mt Ukraine corn. USDA China import guess is 7 mmt which should be raised. Positive US and China trade talks helped rally futures.

CONAB revised 7 years of Brazil soybean production. Combined they added another 14 mmt of production. They estimated the 2020 crop at 124.5 mmt up 3.6 and raised 2021 crop forecast to 133.5 mmt. Brazil farmer has already sold 40 pct of the 2021 crop. CONAB also increased 2020 corn crop to 112.4 mmt versus USDA 107.0.

Recent rally in US wheat prices now has US HRW export prices $5-10 dollars above German/Baltic and $20 above Russia. This could slow demand for US wheat exports.

Preliminary Open Interest saw SRW Wheat futures down roughly 2,800 contracts; HRW Wheat down 3,500; Corn down 42,800 Soybeans up 1,500 contracts; Soymeal up 560 lots, and; Soyoil up 2,900.

Sep deliveries are estimated near 0-250 wheat, no soybeans, 2,000-3,000 soyoil, 250-500 soymeal and corn 500-1,000.

On Tuesday, Managed funds were net buyers of 6,000 contracts of SRW Wheat; net bought 30,000 Corn; bought 15,000 Soybeans; net bought 3,000 lots of Soymeal, and; bought 3,000 Soyoil. We estimate Managed Money net long 2,000 contracts of SRW Wheat; short 65,000 Corn; net long 115,000 Soybeans; net long 7,000 lots of Soymeal, and; long 61,000 Soyoil.

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