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China's Yuan Falls Sharply in the Overnight

The sharp drop in the Chinese Yuan rippled throughout global markets last night and triggered selling in commodities.

Cody Headshot

In the overnight session the grains are trading lower with corn own 6 1/4 cents, soybeans down 14 3/4 cents and wheat down 7 3/4 cents. The U.S. dollar is lower by .17 percent and crude oil is trading lower by over a dollar. China policy makers cut its daily reference rate by 1.9 percent which triggered a sharp selloff in its currency the Yuan. The policy to cut the reference rate was intended to help combat the economic slowdown that has dominated Chinese markets over the last few months. The move to cut rates and devalue the Yuan triggered selling in commodities last night as traders worried that a continued decline in the currency would hurt the buying power of Chinese consumers.

Crop progress was reported yesterday and showed that corn and soybean conditions were unchanged. The corn crop was rated 70 percent good-to-excellent and the soybean crop was left unchanged at 63 percent rated good-to-excellent. Weather over the next two weeks will be critical for soybeans which have 69 percent of the crop setting pods. Winter wheat harvest has mostly wrapped up with 97 percent of harvest complete which is ahead of the 4 year average of 90 percent harvested. Spring wheat conditions declined by 1 percent to 69 percent of the crop rated good-to-excellent.

Brazil’s government crop supply agency dramatically increased their 2014/15 corn crop to 84.3 million metric tons from 81.81 million metric tons in July. The soybean crop was left mostly unchanged at 96.20 million metric tons compared to the July estimate of 96.22 million metric tons. Conab forecast 2015 wheat production would total to 7.00 million metric tons on par with July’s estimates.

Keep in mind that the August Supply and Demand report and Crop Production report will be released on August 12th at 11 AM CST. These reports will show the resurveyed acreage throughout much of the states that experienced heavy rainfall throughout the spring and will provide the first survey based yield estimates.

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