- HEADLINES: Chicago selling on Gulf closure and uncertainty on electrical power restoration; China buying PNW soybeans and sorghum; NASS Sept crop report
- Chicago futures are sharply lower at midday on fund selling amid the continued worry over when US Gulf export facilities will come back online. FOB and CIF offers are lacking which is frustrating importers while the futures market endures chart-based selling. Exporters that would normally buy futures to buffer the decline are lacking or non-existent, there simply is no cash export market in the Gulf. For now, it is not about the S&D of US or world grain, it is about when will the Gulf come back to some normality of US grain trade.
- Assessments of Gulf loadout facilities are ongoing. We hear that Zennoh and Bunge are both making their damage assessment today. CHS has flooding issues while ADM reports that all they need is electrical power to return to operation. Cargill has structural damage that will require months to fix. Cargill is shifting its exports to other facilities including the PNW.
- Since there has not been any pictures of structural damage to Zennoh or Bunge, traders are hopeful that it will not take much for them to restart operations. Yet, to turn on the lights takes electrical power from Entergy, and the tangles of lines to get NOLA back up is staggering. Recent day Chicago weakness is all about NOLA export uncertainty.
- Traders will await the Zennoh/Bunge damage assessments. However, the big worry is when will power be restored. Entergy is expected to produce a damage report and when electrical power can be restored on Thursday or Friday. Then some 20,000 workers will be utilised to bring the power back up, but it is getting the power to New Orleans that will be prioritised. The damage to the grid is the big worry and why all the failsafe systems simply failed.
- There is also a fire at the Marquis Ethanol plant in Hennepin, IL It is a 7-alarm blaze with more than dozen departments sending equipment to battle the fire. No word on any injuries or how long the plant will be down. Marquis Energy is a 365 million gallon plant that produces ethanol, DDGs and corn oil.
- NASS indicated that it will not wait until the October report to utilize FSA/RMA, satellite, and any new data sets for the September crop report. Normally, NASS incorporates the FSA/RMA data in the October report. We noted that US corn and sorghum seeded acres could increase following the FSA report of August. However, the degree of increase would depend on the September data. NASS wants to be proactive in utilising as much data as possible in September.
- US ethanol production slumped to 266 million gallons vs 274 million gallons last week. The slide is based on plant maintenance and high cash basis of old crop corn. US gasoline consumption held strong at 9.6 million gallons for the week, which is above 2019, the prior record. We calculate that 2020/21 US ethanol use is forecast at 5,035 million bu or some 40 million less than the USDA forecast.
- The GFS weather forecast is close to the overnight run via rainfall locations and amounts. A system produces showers for the N Plains on Friday with chance of rain for KS/NE on Saturday. A broad Ridge/Trough pattern follows with mostly dry and warm weather for the Central US next week. A very weak tropical system (not a hurricane) is noted in the Gulf on Sept 11-13 which produces heavy rain for W and C Louisiana.
- NOLA damage and the uncertainty when electrical power will be restored has pressured Chicago futures for the past 3 days. The Chicago break is on fund liquidation and the lack of export bids from importers that source from the Gulf. No one knows for sure when SE Louisiana power will be coming back on, or when employees can safely return to their homes and work. December corn has fallen to support at $5.10-5.20 with November soybean support noted under $12.50. US wheat is less dependent on export demand and has held much better. China is buying US soybeans off the PNW with rumours that it is also booking sorghum for Nov-January. We see the corn/meal market as nearing a low with our advice to cover needs into 2022. This is no place to make new cash sales.