TOP STORIES:
Wheat Higher as World Supplies Shrink
Wheat for September delivery rose 1.9% to $5.39 1/2 a bushel on the Chicago Board of Trade Friday.
U.S. wheat futures rose Friday largely due to indications of constricted wheat supplies globally. "There is talk of a lower French crop, higher replacement values for Russian wheat, and chart buying, with little in the way of harvest hedging," said Charlie Sernatinger of ED&F Man Capital. On Thursday, the International Grains Council projected 2020 world wheat production at 762 million tons, 6 million tons less than its previous estimate.
Increasingly Rocky US-China Relationship Spooks Grains -- Market Talk
09:36 ET - Although Chinese buying has been present in the US grain export market, it's unclear how long that may last when the US and Chinese governments engage in a tit-for-tat over closing consulates. "No one in the grain industry understands how the worsening relations between the US/China will impact the Phase 1 trade deal," says AgResource. "Some fear that China will slow their ag purchase pace following 2-3 weeks of whirlwind demand." The USDA reported a new sale of 252,000 metric tons of soybeans to unknown destinations Friday, which won't likely reassure worried grain traders. (kirk.maltais@wsj.com; @kirkmaltais)
STORIES OF INTEREST:
Corn Pressured by Ample Supplies -- Market Talk
13:49 ET - Corn futures have been down on the CBOT all day amid the specter of huge corn supplies in the US being unchanged by weather forecasts showing isolated rainfall across the US going into next week. "The corn market is struggling with the prospect of record large yields--favorable temps during the fill stage--and 33-year large US corn stocks," AgResource says. The six-10 day forecast from agricultural research firm DTN shows scattered showers across the US through next week, supporting crop growth. In its last Wasde report, the USDA projected corn production of roughly 15B bushels in 2020/21. Corn futures are down 0.3%. (kirk.maltais@wsj.com; @kirkmaltais)
Soybeans Down as Grains Traders Unmoved by Export Sales Streak -- Market Talk
13:28 ET - A streak of nine days straight of export sales notices by the USDA for grain exports is starting to lose its luster among grains traders, who no longer seem excited even as the USDA continues to confirm that US soybean exports are being purchased. "The trade maybe getting too comfortable to the daily 24-hour reporting system, in our opinion," says Terry Reilly of Futures International. The USDA confirmed this morning that 252,000 metric tons of soybeans were sold to unknown destinations, but yet the most-active soybean contract on the CBOT is down 0.1% Friday. Soy oil is down 0.4%, even though Malaysian palm oil futures trended higher last night. (kirk.maltais@wsj.com; @kirkmaltais)
Brazil Inflation Outlook Could Permit Another Rate Cut -- Market Talk
09:58 ET - The benign outlook for inflation in Brazil and the country's struggling economy could spur the central bank to cut its benchmark lending rate by another 25 basis points at its next meeting, in August, according to Alberto Ramos, an economist at Goldman Sachs in New York. Brazil's statistics agency reported Friday that consumer prices rose 0.3% in the month through mid-July and increased 2.13% in the 12 months through mid-July. The central bank cut the rate by 75 basis points at its most recent meeting, and left the door open for another, smaller, adjustment in its statement announcing the cut. Brazil's volatile currency, along with political risk and increased government spending will limit the scope for more cuts after August, Ramos said. (jeffrey.lewis@wsj.com)
THE MARKETS:
Cattle Inventories Stay High -- Market Talk
15:33 ET - Inventories of US cattle totaled 11.4M head as of July 1, down slightly from the same time last year. It is still the second highest cattle inventories have been since 1996, which may be bearish for cattle futures considering that demand is uncertain amid the coronavirus pandemic. Ahead of the report, live cattle futures on the CME traded 0.5% higher at $1.051 per pound Friday. Lean hog futures on the CME, meanwhile, fell 1.7% to 50.15 cents per pound. (kirk.maltais@wsj.com; @kirkmaltais)
