Drought has reduced wheat yields in Europe.
France, a major wheat exporting country has been hit with hot dry weather. The Black Sea region from Uzbekistan to Kazakhstan is now in drought also. Russia has reduced wheat output estimates by 5 million tons.
Canadian wheat acres have been significantly reduced with excess rain preventing planting.
Asian production could drop 20 percent, European production 10 percent.
Weekly wheat export sales of 513,000 tons were above market expectations. World production estimates are down 7.5 million tons. World ending supply is predicted to decline at 187 million tons.
Bearish news: Harvest pressure on prices has taken a back seat to the news about Eurasian wheat. Wheat could become overbought.
The spring wheat crop rates 83 percent good to excellent. That is way above the average of two-thirds good to excellent. Over 50 percent of the spring wheat crop is heading. U.S. wheat production could increase 100 million bushels. Sixty-three percent of winter wheat is harvested.
Wheat production in Australia is on track to produce a bumper crop. India has enough rain on wheat growing areas to project a larger than expected harvest.
Export inspections in the United States have dropped over a million tons to 16.7 million from 18 million.
Bearish news: There have been no deliveries of July soybeans this month. Soy-meal deliveries are also zero but soy-oil deliveries were a modest 1,200 contracts. Export inspections are the lowest since last September at 2.25 million bushels.
Soybean production estimates were increased 35 million bushels primarily due to the increase in soybean acres. Weather remains production favorable with recent rain in the south and warmer dry conditions in the Corn Belt.
Bullish news: China bought 120,000 tons of new crop soybeans in one day. South Korea bought 25,000 tons. Chinese exports are expected to continue. China is crushing 4 million tons of soybeans per month. Indian soybean production areas are short of moisture.
The USDA crop condition rating was price bullish. The rating fell 1 percent to 66 percent good or excellent. That number is 3 percent above average on a record number of acres.
Weekly export sales of soybeans over 600,000 tons were greater than anticipated. Indiaβs monsoon rains are 16 percent below normal, limiting yields of grain and oilseed.
Bullish news: Heat has reduced pollination in most of our corn crop. There will be missing kernels in much of the crop. Pollination in corn does not occur when temperatures rise over 90 degrees Fahrenheit.
Weekly corn deliveries were steady at 2,570 contracts. Farmers are still holding corn in storage. World corn supply is down 6 million tons to 141 million.
Bearish news: Corn export inspections were down 11 percent from last week and 15 percent this week near 34 million bushels. The crop rating was down slightly to 71 percent good or excellent but that rating is far above average. Corn carryover estimates over 1.4 billion bushels weighs heavy on prices.
Europe and Asia have favorable corn production weather. Record yield potential in the United States remains probable with good weather. Weekly export sales were disappointing at 826,000 tons.
Corn condition ratings are high at 73 percent where average is 66 percent. 38 percent is silking where 26 is average.
Bearish news: Rice acres are 100,000 more than anticipated by USDA. Medium grain rice acres are lower but long grain rice acres are up 475,000. The current production estimate is heavy at 190 million hundred weight. The U.S. crop is large and in excellent condition. World supply is growing as demand declines.
Bullish news: Rice markets remain oversold. Open interest on the sell side of the market has increased until sellers are getting difficult to find. It may be difficult for prices to fall further without more exceptionally negative news.
Bullish news: Deliveries this week were large. There were 289 contracts delivered. Even if U.S. carryover increases back to 3.5 million bales, the use is likely to be 6 million bales or higher. Weekly export sales of 327,000 bales met market expectations. That level of export remains above the amount needed to meet USDA projections for yearly export sales.
Cotton supply is tight. Only 217,000 bales are certified for delivery. That is limiting exports and not enough to meet demand.
Bearish news: 64 percent of the cotton crop is squaring, 15 percent is setting bolls, and 67 percent of the crop rates good to excellent where 52 percent is average. With 19 percent more cotton acres we could produce over 18 million bales making up the shortage unless the world economy grows significantly.
Cotton acres are now estimated at 10.4 million by USDA which is 100,000 higher than the greatest private estimate. USDA put cotton production at 18.3 million bales. That puts cotton carryover back up to 3.5 million bales.
Job creation in the United States remains slow and so does spending. Some private sources are suggesting December cotton to bottom out between 73 and 70 cents. An economic slowdown is anticipated. Cotton prices are within a consolidation pattern. The likely breakout will be toward the downside.