Generally weaker overnight activity in thin volume as traders square positions ahead of Friday’s report. Daily volume totals (shown below) have been near 3 month lows the past few days, and open interest has been slowly declining as we head into a key USDA report. If I sound like a broken record, its because the past few days have had a “Groundhog Day” feel to them, with minimal fresh fundamental news and choppy/directionless trade. The biggest news overnight has to do with the Russian food security meetings giving no indication of any kind of wheat export tariffs or bans. Some traders still feel this is possible, but commercial sources seem to advocate no restrictions to any exports. Overall, I would look for continued choppy trade near term, with a bias to the downside.
Overnight, there were some 0.25-0.75” rains that fell across parts of the WCB. Coverage was limited. These rains will be moving eastward into the weekend, bringing heavier amounts and better coverage to the ECB. The extended weather outlook is mostly unchanged from yesterday. The models still show above normal precipitation for parts of the Corn Belt, although the coverage areas tends to want to move north and west into the Dakotas and MN, and does not seem to impact IA and NE this morning. Overall, this forecast definitely looks far less threatening than what we have just come through, but there isn’t what I would call a great deal of relief still.
24 hour precipitation map shown below:
Farmer selling remains slow.
It’s fascinating to see how few deliverable corn stocks there are in the system this year. This despite gulf basis below delivery equivalent versus Sep futures currently. This cash market truly is a situation of low supplies, but low demand, as well. Corn spreads continue to generally weaken, with CU/CZ trading to 5.50 cent carry overnight. Keep in mind, this was trading at a 36 cent inverse just weeks ago. Ironically, we did start to see some basis appreciation in the interior NWCB markets. We are starting to hear end users inquiring about new crop basis ownership, but limited commercial ownership is creating a tough-to-identify market. The 2012-13 marketing year is going to be very interesting.
Average trade estimates for Friday’s production report shown below:
Average guesses on Carryouts:
Weds : API/DOE Energy Report
Thurs : Export Sales; Weekly Jobless Claim;
Fri: USDA August Crop report; CFTC Report
Mon: Export Inspections; Crop Progress
Russia to have 12-13 mln t export grain, no limit needed-lobby
MOSCOW, Aug 8 (Reuters) - Russia will have an exportable grain surplus of 12-13 million tonnes this year but will not need to limit exports under any harvest scenario, the head of Russia's main industry lobby, the Grain Union, said on Wednesday.
"It would not be objective to raise the issue of export restrictions right now," Arkady Zlochevsky told a news conference in Moscow.
• Argentine exchange warns of 20 pct drop in corn acreage
BUENOS AIRES, Aug 7 (Reuters) - Argentine farmers may slash the amount of land they seed with corn by a fifth this year after the previous season's drought-hit crop eroded revenues, the Buenos Aires Grains Exchange said on Tuesday in its first forecast of the year. The downbeat outlook, which the exchange said was subject to change before farmers in the world's No. 2 exporter make final planting decisions at the end of August, is a jarring contrast with other early forecasts calling for a record crop.
• Obama says US Midwest drought historic, seeks aid for region
WASHINGTON, Aug 7 (Reuters) - President Barack Obama on Tuesday said the drought in the U.S. Midwest is taking a heavy toll on the crop growing region, and called on Congress to pass a farm bill that would provide more aid to ranchers and farmers.
"We are seeing devastating droughts throughout the country. It is a historic drought and it is having a profound impact on farmers and ranchers all across many states," Obama said, following a meeting with members of the White House Rural Council.