One-third of the Russian wheat crop may be abandoned due to decimated yield potential. Wheat production estimates in Russia are down twenty-five percent. Planting estimates for winter wheat are down in Russia.
Ukraine will export 1.5 million tons of wheat, down from 9 million last year. Kazakhstan and Belarus have indicated they will also lime wheat exports. Canadian wheat production is down twenty percent and there are quality problems. Egypt is buying, 600,000 tons of U.S. wheat since Asian and European wheat are unavailable.
Fifty-five percent of the world grain crop has been affected by drought. Europe and Asia will increase wheat imports following the drought. Morocco estimates imports near 3 million tons, Russia 4 million. U.S. wheat exports were above expectations at 1.4 million tons.
Bearish news: U.S. wheat production will make up for the limited production in Asia. Chinese wheat production estimates have increased. India has more than twice the normal amount of wheat in storage. Indian wheat supplies are growing and now exceed 33 million tons.
Bullish news: Soybean pod set in the Delta has occurred during hot dry weather and that will limit yield potential. The Corn Belt soybean crop has Sudden Death Syndrome which may also limit yield potential. It will take a yield reduction estimate to support higher prices.
Soybean shipments are finally picking up. Over 222,000 tons were shipped last Monday up from zero the previous week. Soybean export sales were above expectations slightly at 2.23 million tons. Weekly Export Sales are thirty-five percent of USDA predictions. Eighteen percent is average.
Bearish news: Soybean crush is down one and one half percent from last week to 124 million bushels. Palm oil imports and prices have weakened. Argentine soy oil exports are increased to nations other than China.
The soybean crop is early and markets are overbought. The current pod count indicates a record 44 bushel yield per acre might be on target. U.S. soybean supply is expected to increase 200 million tons.
Bullish news: Asian animal feed demand has increased four percent a year for several years. With economic growth in Asia averaging fourteen percent, meat consumption has increased significantly. With less wheat available and higher wheat prices, corn is substituting as feed grain. Since Asian and European corn production is down from drought, the United States has most of the world’s corn supply for export.
China is releasing less corn into domestic markets to curb inflation. The Chinese corn crop may be smaller than anticipated. China may need to import additional corn. Chinese corn imports were up two hundred percent this month.
Weekly export sales were over a million tons above market expectations. The number is 2.9 million tons sold last week. Egypt bought 240,000 tons of U.S. corn.
Ethanol production is up eighteen percent over last year at 860,000 barrels a day.
Bearish news: South American corn is available for export and there are large supplies in storage in Argentina. Argentine farmers are reluctant to sell with large export taxes and high inflation. Grain is worth more in storage.
U.S. weekly export inspections of 31 million bushels are below the USDA estimate of 74 million. Expect some profit taking near term.
Bullish news: Rice production estimates are down slightly and may decrease even more. High wheat prices are stimulating more rice substitution for wheat. Export potential has increased. The flood in Pakistan has damaged their rice crop. It is estimated that Pakistan production is down 2 million tons from previous estimates.
Rice exports are ten percent above market expectations. Ending stock estimates are down below 57 million hundredweight. Export sales were 138,000 tons last week.
Bearish news: Any price pull back for wheat will diminish rice demand and export potential. Harvest pressure has begun to affect rice prices. Additional exports are needed to support current market prices. Technical charts are tuning negative, this may be the selling opportunity.
China bought 600,000 tons of Vietnamese rice. This will diminish the supply in Vietnam and that is bullish.
Bullish news: The Pakistani flood has the potential to reduce cotton production in that country by 2 million bales. Pakistan will import cotton to make up the difference.
Cotton stocks registered for delivery have dropped to 19,000 bales, a decline of ninety-eight percent in this year. That is the tightest supply number on record. The crop rating, sixty-two percent good to excellent is down three percent this week.
Chinese cotton imports increased twenty-nine percent in July over last year. Asians, evidently can afford to buy more clothes than we can. Imports are up. Export sales were 462,000 bales where only 342,000 were anticipated. Prices hit a 2 year high.
Bearish news: India indicates that cotton exports from that country will increase. Previous estimates of Indian cotton exports were 3 million bales. That number has been increased to 5 million bales.
Manufacturing output in the United States has declined. China has a bumper cotton crop but Pakistan production is down 2 million bales. Chinese production is up two percent. Jobless claims in the United States weigh heavy on cotton markets.