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As I commented a couple of days ago, it seems that we are being fed a consistent stream of news concerning wheat growing issues around the globe, which as it turns out is a very welcome counter-balance the seemingly never-ending threat of new tariffs. While there has been a lull in action now and again, this has kept the wheat market trudging higher and in turn, brought the corn market in particular along for the ride. By only a small margin thus far, this morning Chicago wheat has poked into a new high for the year and to the highest level traded since last summer. Today’s update brings us news from Australia, where it is now estimated that the New South Wales state is projected to see production of somewhere between 3.5 and 4.2 MMT compared with a 5-year average of 7.1 MMT. The most concerning drought condition appear to be on the eastern side of that continent, but the western production areas have been impacted as well. The overall crop is expected to total less than 20 MMT, which is not a dramatic cut from last year’s 21.2 MMT but is significantly below the record crop produced in 2016/17 which tallied 31.8 MMT. Let’s not stop there are there have been additional horror stories coming from Northern Europe concerning that drought with an analyst from Strategie Grains now labeling as “catastrophic.” Almost ironically, the UN food agency reported that the global food price index fell 3.7% in July, and while wheat is by no means the only commodity in the index, you have to wonder if these ongoing problems will not stop further declines in their tracks. As I noted earlier this week, wheat is pressing against key levels of resistance and extending beyond current price levels would suggest that the bull who has actually been subdued for the past six years has finally been released from his confinement.
Unfortunately, one place we have not seem much excitement develop just yet is in U.S. export sales. The weekly sales report was released this morning, and for wheat, we sold 382,500 MT or 14.06 million bushels. This was in line with the range of expectations and little changed from the previous week but was 21% above the 4-week average. Top purchasers were Taiwan with 104.9k MT, the Philippines at 104.5k and then Indonesia with 70k. Current crop year corn sales did not provide much to cheer about coming in at 292,000 MT or 11.5 million bushels. This was 14% below last week and 36% below the 4-week average. Japan was the top buyer with 126.4k MT, followed by Taiwan and South Korea who purchased 78.6k and 73.8k respectively. 2018/19 sales were solid though with a total of 986,100 MT or 38.83 million bushels. At the top of the list, we found unknown destinations with 372.5k MT, followed by Mexico at 286.1k and then Japan at 106k. Old crop beans sales were not much to write home about either with a total of 93.7k MT. This was 76% below last week and 71% under the 4-week average. Sales reported to Germany of 143.3k MT, Pakistan at 68.5k and the Netherlands at 66.6, which were counter-balanced by cancellations of 316.2k by unknown and 120k China. It would appear that negative sales will be just around the corner. 2018/19 sales were not bad though coming through at 543,300 MT or 19.97 million bushels. The top buyer was Unknown with 411.6k MT, followed by Switzerland with 60k and then Japan at 30k. Note that meal sales were 32% below the 4-week average and oil sales 20% under the 4-week average.
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