Thursday brought us our weekly export sales report. Wheat sales were strong at 1.077 M.M.T. Key world buyer Egypt was in for 135 T.M.T. That's going to be the key to near and long term U.S. exports thru year end as Egypt last year solely bought Russian wheat and snubbed their old friend and trading partner the U.S. Now we're their buddy again as Russia suspended wheat exports until December 31 due to drought. The Egypt business is the tie breaker in world business as they import more wheat each month than any other country. If the Russian winter wheat crop, now going to seed thru September, runs into the same drought problems the spring summer crop did, the export ban will become indefinite and Egypt's buying of U.S. wheat into next year will be as dramatic as China's buying of U.S. beans for its protein mandate. U.S. wheat inventories are at 23 year highs today but quickly could be at 3 to 6 year lows a year from now. We saw that accrue off the 2008 historic high prices on drought in Russia and Australia dropping our ending wheat stocks to 30 year lows. Corn sales were old and new crop year combined at 1.733 M.M.T. versus 2.800 the week prior but still a very large weekly sales indicator. Asia sales were 800 T.M.T. with China in for 193 T.M.T. China has been in the last two weeks beginning their goal to replenish their strategic grain reserve that was depleted this year due to poor growing season weather.
Soybean sales old and new crop year were 991 T.M.T. with key world buyer China in for 279 T.M.T. Though down 8% from the week prior, we still remain at a record export pace. We should expect a little slower export pace in early September as harvest kicks in but at the 30% harvested point for corn and beans, cash demand for grain will be its strongest of the year as exporters, feeders, and ethanol producers rush in to insure needs are met. Looking ahead, If we're going to have one more leg down it has to come before next Friday September 3. Reason, because the week after Sept. 3 gives us the Sept. 10 U.S.D.A. monthly crop report.
No one will want to be short the market prior the report, so expect short covering and speculators will begin to buy long all leading to price strength prior the report release as traders will fear another drop in ending stocks inventory for corn, beans, and wheat. Traders trade fear before fact and the fear will be lower carryover stocks. If another month end and pre-harvest price break accrues, December corn will push to 4.10. November beans 9.80 and December wheat 6.45.
To turn chart bullish and avoid another leg down in prices, December corn needs a close over 4.40 . November beans over 10.20 and December wheat a close over 7.30 If the market fails to correct , next weeks strength will come from southern delta yield results coming in much lower than expected. After all, that area was the hottest and driest. Were hearing of central Illinois and Indiana corn yields being very disappointing. Just a note, the last four Fridays saw corn and beans close higher or at or near the high of the week, then trade higher on the Sunday night trade , higher on the Monday opening day session but sell off the Monday highs and trade lower into Tuesday.This today looks very familiar.Tim Hannagan pfgbest.com