Headlines:
Heat Wave Cooking Crops Likely to Ease After This Weekend
A heat wave that’s been hovering over the central and southern Midwest in the past few days will continue at least through this weekend, which means further damage to corn and possibly soybeans in the region, but relief is on the way. Temperatures in the next few days will hover in the triple digits in much of Missouri, parts of eastern Kansas and Oklahoma, and much of Arkansas, according to the National Weather Service. Excessive heat warnings are in effect, as indexes are expected to reach as high as 115˚F. in parts of Oklahoma and Arkansas, the NWS said. Temperatures in the region are forecast by Commodity Weather Group to be up to 8 degrees above normal for the next five days before moderating back to about normal in the six- to 10-day outlook. “A lot of the heat in the area is taking a little bit of a breather (in recent days), but we do see another surge coming in that’s going to peak tomorrow and through the weekend, but then it knocks down quickly after that,” said Joel Widenor, a meteorologist at CWG. “It looks like once we get past the weekend, it starts to moderate. The worst will be what comes in over the weekend.”.
World agricultural markets have a new worry: slumping crude oil prices
Much of the raw commodity sector, including global agricultural markets, has taken it on the chin the past several weeks, as the U.S.-China trade dispute drags on with no indications of either side blinking. Commodity traders tend to factor into futures prices worst-case scenarios regarding events like the U.S. adopting a more aggressive posture on fair trade. U.S. grain markets have been hit the hardest by the trade dispute, and also U.S. swine. However, international foods markets (coffee, cocoa and sugar) are also seeing their prices depreciate. Enter another bearish element for the raw commodity sector: Crude oil prices this week have seen another solid leg down. Crude oil is arguably the leader of the raw commodity sector, and its drop from the early-July high above $75.00, basis NYMEX futures, is another blow to the beleaguered commodity markets. If crude oil prices continue to trend lower in the coming weeks, it will be just that much more difficult for many raw commodity markets to mount sustainable rallies. An examination of the Goldman Sachs Commodity Index daily chart shows the recent slide in the sector that began in early May. For the raw commodity markets, including world agriculture markets, to be able to sustain price recoveries, it’s very likely going to take a stabilization in crude oil prices and a significant de-escalation of the trade friction between the U.S. and its major trading partners, but most notably China.
Summary:
Crude oil futures finished the day higher after the US Dollar failed to maintain intraday gains. The Dow Jones Industrials appears to have taken a hit amidst rumblings of additional interest rate hikes. Today, the Corn complex seemed to benefit from being oversold on its technical charts. White House Economic Council Larry Kudlow called out China for delaying trade resolutions. China’s actions have not been sympathetic to the Soybean complex. Rumors have been stirring that an independent deal with Mexico may come together soon. Generally, the trade is starting to think that Grains and Soybeans have or will be seeing a bottom in the not to distance future.
The USDA released its Weekly Export Sales Report showing strong demand for Corn and Soybeans:
Corn = 1.415 million metric tons vs. the trade’s expectations of between 500,000 and 1,000,000 mt.
Soybeans = 865,000 mt. vs. the trade’s expectations of between 300,000 and 1,000,000 mt.
Wheat = 300,000 mt. vs. the trade’s expectations of between 150,000 and 500,000 mt.
