More export problems for South American corn.
Another mixed thin volume trade night for grains, with corn and wheat trying to create a recovery in price. Soybeans are stalled on the prospects for rain across the Lake states, including Iowa. Volume overnight was thin compared to the average July evenings with the upcoming USDA crop report on Thursday, August 12. Wheat was firm, or in recovery on fresh world wheat demand with Turkey purchasing 325,000 MTs & Jordan holding a tender for 120,000 MTs and South Korea, 135,000 MTs has boosted world wheat prices. Iran is said to be back in the market with this week's export trade volumes rising.
In Brazil, corn offers are again rising as Brazil's Grain Export Association Anec forecasted they would ship out just 17 MMTs of corn in 21/22. This is down 18 MMTs from last year and down 11 MMTs below the latest July WASDE Brazilian corn export forecast. The Anec Brazilian corn export forecast is not a net trade total with Brazil to import an estimated 3.5-4.0 MMTs from Argentina. WASDE in the April forecast that Brazil would export 39.0 MMTs of corn, with the August Anec estimate being 22 MMTs lower or a massive 865 Mil Bu.
Another factor that ultimately affects corn prices, but has not responded to yet, is the Argentine trucker strike, which there are always numerous ones every year, but they are now seeking more pay to be vaccinated against Covid. Due to the Parana River being at a 77 year low in water volume, Argentine truckers have discovered a new “choke-point” for the grain industry and the government, Bahia Blanca, the downriver terminal that tops off vessels before departing across the Atlantic. The truckers strike started Friday at the Bahia Blanca terminal, which has run out of stored corn/soybean inventory this morning. This means that ocean vessels loaded at 50-60% of capacity in Rosario can no longer top off at a cost exceeding $1.40/Bu to head out into the Atlantic. This is bringing the Argentine corn export program to a halt, with ships cueing up in the shallow waters of the lower Parana. The most significant impact will be on Argentine corn, with traders closely monitoring the situation.
World valuations for grain are rallying while the US stands still and is becoming the cheapest source and the most readily available of supplies (on paper). Demand is diminished at the moment, as end users are again hoping and praying for a bearish August WASDA report that allows them to scoop up a deeper discount ahead of the upcoming crop harvest in 2 months. Today we receive another crop yield guest from Markit (old Informa Group and typically a high yield guesser) is rumored to be announcing their US corn/soybean yield estimates.
On weather forecasts, the various models agree that a below normal rainfall and above normal temperature pattern will grip the Plains and S Midwest while the Lake States, including Iowa, have several rain chances with totals of .25-1.25″ in the next 10 days. The GFS/EU models are drier than the noon runs of yesterday but still have needed rainfall for N Iowa/N Illinois. A warming trend starts today with high temps reaching the upper 80's to the lower 100's. This is a warm to hot 10-12 day weather period, with the toastiest temps being across the Plains and the Upper Midwest. Crop maturity will be pushed to the detriment of yield. The 11-15 day forecast features the same weather trends – above normal temperatures and below-normal rainfall with the driest area being the Plains and the NW Midwest. High temps will hold in the mid 80's to the lower 100's.
Live cattle futures trade was higher yesterday, while cash trade Cash trade at midweek was slow but higher. Cattle sold $2 higher in Texas and $1 better in Kansas at $122. Live cattle in Nebraska brought $125 or $1 better and dressed sales were up $2 at $198. Cattle slaughter at midweek was 359,000 or 1,000 head better than last week. However, the choice cutout on Wednesday was up $3.50 at $289.34, and the select value moved $3.66 higher to $271.15. Including bi-products, estimated packer margins are near $675/head.