-Grain markets decline in decent Midwest rains
-Crop conditions a mixed bag last week
-USDA reports modest soybean sales to China
-Considerable differences in weather model ideas
Grain markets eased lower overnight on continue verification of decent rains across the corn belt (see maps on page 2), with additional rain opportunities over the next 10 days, although the models are in conflict. Yesterday afternoon’s Crop Progress update was all over the place, with considerable corn and soybean condition declines in the eastern belt, but improvements in the west. Spring wheat conditions took a hit, while winter wheat improved. Conflicting comments on the Chinese trade deal by a White House trade advisor and President Trump overnight prompted considerable market volatility.
ï‚· U.S. corn crop conditions last week improved 1% in good/excellent to 72%, while market expectations reflected ideas for a 1% decline. It was a stark difference from east to west with IL declining 4% g/e, IN down 8%, OH down 7% and MI down 7%, increases were seen in IA of 2%, MO 7%, NE 3%, SD 5% and MN 1%. Overall conditions remain modestly above the 5-year and 10-year averages for this time, but below 2018, 2016 and 2014.
 U.S. soybean conditions declined 2% in g/e to 70% (expectations reflected 1% decline), with the same pattern as seen for corn. In the east, declines were seen for IL by 4% g/e, IN 8%, OH 7%, MI 10% and WI 3%, while the west saw improvements in IA of 2%, MO 5%, KS 4% and SD 3%. ND and NE did decline, though by 4% and 1% g/e, respectively. This week’s rains should help eastern conditions bounce back, though. As with corn, soybean conditions are a bit above the 5-year and 10-year averages, while being a bit below those of 2018, 2016 and 2014.
ï‚· Winter wheat harvest is now 29% complete vs 15% last week, 13% last year and 26% average, while crop conditions improved 2% g/e to 52% and compares to 61% g/e last year.
 Spring wheat conditions declined solidly by 6% in g/e to 75% (80% g/e expected) following a 9% drop in ND and 7% decline in MN. Overall spring wheat conditions are right in line with the majority of recent years for mid to late June. Last year’s crop at this time was also 75% g/e.
 For full details on yesterday afternoon’s Crop Progress update, please see our Market Insights post at
https://portal.rjobrien.com/MarketInsights/Blog/Read/40524.
ï‚· USDA reported the sale of 132k tonnes of soybeans to China for 2020/21, new crop, delivery this morning.
ï‚· China imported 640k tonnes of corn in May vs 890k tonnes in April and 750k tonnes last year May. 2019/20 marketing year to date (Oct-May) imports of 3.7 MMT compare to 3.0 MMT last year. May imports of sorghum were 270k tonnes vs virtually zero last year May, with 510k tonnes of barley imported vs 311k tonnes last year May. Wheat imports in the month of 810k tonnes compared to 207k tonnes last year, while pork imports of 370k tonnes compared to 199k tonnes last year May.
ï‚· China approved two new soybean GM varieties for import for feed purposes, one being a Chinese-developed variety making it the first to be created by Chinese interests and approved for global cultivation elsewhere and eventual import into China. A Bayer/Monsanto variety was also approved. The also renewed the safety certificates for six other GM crops, 5 corn and 1 soybean.
 The CME and Brazil’s B3 stock exchange plan to launch a Brazilian soybean futures contract, which will be cash settled in dollars and based on a benchmark of the soybean export price at the port of Santos. Some traders expressed skepticism the contract would be able to attract sufficient interest by Brazilian participants given the liquidity available in Chicago and added costs/logistics of establishing structures to trade the contracts on Brazil’s exchange. Some expressed concern, as well, that the cash-settled nature of the contract vs physical settlement could attract more speculators rather than hedging interests.
ï‚· The EU cut the import duty on corn by 55% to 4.65 euros/tonne ($5.24) in a re-adjustment based on market prices. The import duty was introduced in late April (raised in early May) as the weakness in U.S. prices resulted in import values moving below a regulatory price floor.
Weather
Rains of .35-1â€+ fell across the eastern 2/3 of IA, far northern and far eastern MO and then in most areas east of the MS River. Rains will finish up in the east today and then be mainly dry through Thursday. The next round of rains will arrive in the west Friday morning and work through the belt later Friday into early Saturday. The models are a bit mixed in their ideas, but the general ideas calls for rains of .50-1†to fall across around 80% of the belt with the heaviest amounts and greatest coverage favoring MN, IA, WI and northern IL. The 6-10 day outlook has very large differences between the models. The European indicates dry weather to build into the west early Saturday and the east late Saturday and then keeps things fairly dry for the balance of the period (Thursday morning of next week). The GFS sees the rains to continue across much of the region into the first half of next week, with totals of 1-2†across much of IL, IN and OH and totals of .50-1â€+ in the rest of the region. The 11-16 day outlook continues to show ridging to dominate most of the pattern across the central US, producing above average temps and below average precip in all of the Midwest.