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Grains Higher as Volatility Continues


Grains are higher. Volatility continues. 2 week US west and north Midwest warm and dry forecast is bringing back buyers after yesterdays financial and energy washout. SU is up 20 cents and near 14.03.SX is up 20 cents and near 13.93. SMU is near 365.3. BOU is near 65.75. CU is up 10 cents and near 5.66. CZ is up 10 cents and near 5.62. WU is up 15 cents and near 7.13. KWU is up 14 cents and near 6.66. MWU is up `4 cents and near 9.40. US stocks are higher.

USDA rated the corn crop 65 pct G/E vs 65 last week and 69 last year. Below table is one groups guess of US corn yields as of July 1. Some question USDA 179.5 trend yield versus last year when current ratings are below last year and last years 172 yield. Best crop ratings are in TN, NE, WI, MI and IN. Lowest crop ratings are in MN, ND and SD. 56 pct of the crop is pollinating vs 52 average.

There remains talk of lower South America corn exports helping US corn export demand. Still funds are unwilling to buy until they see new sales. Brazil July corn loadings to date are near 1.4 mmt with 2.5 in line up. USDA est July-Sep exports near 12 mmt. USDA est Argentina July-Sep corn exports at 15.5 mmt or 5.2 per month. Best Argentina has done is 4.5 or a July-Sep total of 11.  Some est that 10 mmt will not get shipped and 400 mil bu could be switched to US.

Soybean futures followed yesterday selloff in financials and energy. Prices are trying to recover overnight. NASS rated the soybean crop  60 pct G/E vs 59 last week and 69 last year. 23 pct of the crop is setting pods vs 21 average. Soyoil prices were lowering following lower crude and news that Argentina will lower its domestic biofuel mandate which could increase their exports. Argentina higher soymeal exports is also offering resistance to soymeal prices. Best US crop ratings are in LA, KY, NE, MS and TN. Lowest ratings are in MN, ND and SD where 20 pct of total US acres are. Dalian soybean, soymeal, palmoil and soyoil futures are all lower. US west Midwest 2 week warm and dry forecast is supportive to prices.

NASS dropped US HRS rating to only 11 pct G/E or only 1 pct above record low in 1988. There is no rains in the forecast for next 2 weeks. This and dry Canada prairies and US PNW forecast also supports wheat futures. Russia spring wheat areas are dry, farmers are not selling and breadmakers are talking about raiing prices and Kazakhstan has banned grain and feedstuff exports due to poor weather. EU weather improving but wheat harvest is only 4 pct vs 42 ly. 73 pct US WW crop is harvested vs 59 last week.

On Monday, Managed funds were net buyers of 3,000 contracts of SRW Wheat and 1,000 corn. They sold 11,000 soybeans, 1,000 soymeal and 6,000 soyoil. We estimate Managed Money net long 3,000 SRW Wheat; long 215,000 Corn; net long 77,000 Soybeans; net long 20,000 lots of Soymeal, and; long 50,000 Soyoil.

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