It seems that I am having to scratch a little harder each day to uncover fresh news for the markets. As expected the Egyptian wheat tender went to Russia and Romania with no U.S. wheat even offered due to the fact we would not have been competitive anyway. Wet conditions continue to hamper harvest of the spring crop but at this point, the market does not appear to be overly concerned. On the opposite side of the world, Australia has continued to see increased rainfall which has improved crop prospects "down under" with trade estimate for production in the 23 to 27 MMT range compared with the last USDA number of 26. Seeing this falls within existing numbers would say that it is not bearish per se but after the El Nino hype earlier this year and what has been drier than normal conditions, it removes a possible stimulus. ABARE, who is the Australian counterpart to the USDA will release estimates on the 8th of September.
Wheat was able to bounce away from base support once again yesterday, possibly aided by increased tensions and a few rumor again from Ukraine but that momentum has waned quickly this morning. As I commented yesterday, there remains a possibility that we could see prices dip into lower lows in the days ahead but I would not expect a new leg lower. For now I look for additional sideways activity.
Even though we were able to bounce away from support again yesterday, the corn market struggles and it would appear that it is only a matter of time before the impending harvest forces us into lower lows. If there were any dry pockets in the upper Midwest it would appear they have pretty been eliminated or at least will be over the next 7 days and in parts of Iowa, Minnesota and Wisconsin, it would appear that we have swung the pendulum completely in the other direction. While that could ultimately delay the maturity of the crop and could even hamper early harvest activity, it is always challenging to get markets overly excited about too much rain at any time of the year.
While many southern states have been turning to beans to capture the nearby premium, corn harvest has been making progress. As of last weekend it was estimated that Texas was 46% complete, Georgia 56%, Louisiana 38% and Mississippi 20% with a few others registering in the 1 to 10% range. I wish I could provide solid yield data at this point but only have partial information. That said, the numbers we continue to hear are impressive.
The weekly ethanol number will be released later this morning and should be continue to remain solid with the profitability in the industry.
I am somewhat surprised and mildly impressed that the corn market has been able to hold on a well as it has to this point but as I commented initially, it would appear to only be a matter of time before the floor give way to the weight of record production. We may be able to hold ground into the long weekend, but if nothing bullish materializes before next week, that should become increasingly difficulty to do.
As with corn and wheat, beans were able to bounce from the early pressure yesterday and actually extended a little higher this morning but the onset of harvest and some exception bean yield reports has pretty well taken all the wind from the sails. A few weeks ago I had heard reports that in the Delta, some beans were measuring near 100 b/p/a and I read overnight that 400 acres harvested in Mississippi came across the scale at 96 b/p/a. Incredible.
The possible counterbalance to this has been reports of Sudden Death Syndrome showing up in Indiana and Illinois.We have seen November beans reach the upper end of our price target at 10.20 and price could stabilize now into the long weekend. Regardless, unless weather really take a turn for the worse and brings harvest to a halt, I suspect we will head down to at least the lower targets at 9.80 in September.