- HEADLINES: Chicago mixed with new contract lows in Chicago wheat; Paris wheat holds support; China to change contract specs to 13% moisture for soybeans.
- Chicago futures are mixed at midday with soy futures higher while the grains sag. Traders argue that if NASS/USDA is to come up with any bullish surprises in tomorrow’s USDA crop report they will be focused on the complex. In August, WASDE forecast US 2023/24 corn end stocks above 2.2 billion bu, a sizeable stocks cushion. Yet, US 2023/24 soybean end stocks were forecast by WASDE at a tight 240 million bu in August. Commercials see the bare minimum of US soybean stocks (pipeline supplies) at 200-220 million bu. NASS will not update US 2023 wheat production tomorrow but wait until the 2023 Final Small Grains Report on Sept 30. Any price response of US wheat futures tomorrow will be tied to the US 2023 corn yield or WASDE change in world wheat crops. Chicago and KC wheat values should not have a sizeable reaction to the USDA September report.
- For summer row crops, the September NASS/WASDE Crop report is one of the most important of the year since NASS pulls ears/pods and incorporates FSA data in estimating US corn/soybean seeded/harvested acres and yield. NASS in their actual field surveys will get directionally close to final 2023 US crop yields. However, in the case of soybeans, pod weights will be updated in October with final harvest results of plots available in October and November crop reports.
- Chicago brokers estimate that funds have sold 5,900 contracts of Chicago wheat and 3,500 contracts of corn, while buying 1,200 contracts of soybeans. In the products, funds have bought 2,200 contracts of soymeal and sold 1,600 contracts of soyoil.
- Paris wheat futures have fallen right to key support while Chicago wheat futures have scored new lows at $5.80, the lowest price since December of 2020. It makes no sense to have US wheat trading so cheaply when its stocks are down 39% from the late 2020′s.
- US export inspections for the week ending September 7 were 24.6 million bu of corn, 11.4 million bu of soybeans, and 14.9 million bu of wheat. This was the first week of the 2023/24 crop year for corn/soybeans. In the wheat crop year to date, the US has exported 174.7 million bu (down 61.2 million or 26% from last year).
- Disaster continues to build across RGDS in Southern Brazil in terms of widespread/excessive flooding. Additional rain has fallen following last weekend’s initial shot of 4-10.00” of rain which has damaged more than 4,000 Km of roadways and produced flooding across hundreds of thousands of hectares of crops. More heavy rains are in the forecast. Doubts are growing over the size and quality of the Brazilian wheat crop with most expecting that it will be relegated to cattle feed. Brazil was expected to export 4-5 million mt of milling wheat which is now doubtful. Imports of high pro quality wheat from Argentina will need to start by November. The outlook is the 2023 Brazilian wheat crop is becoming dire for domestic millers.
- China has been floating new soybean moisture specs at 13% due to Brazilian soybeans that are often shipped at 15-17% and won’t store as well for crushers. Brazil would need to dry down their soybeans to reach 13%. Drying would be costly for Brazilian agriculture and would offer the US a quality advantage. This is why China’s reserve soybean buyers only use US soybeans due to lower moisture content and storability. The industry is socialising the change, China has not set a date for moisture contract change.
- The midday GFS weather forecast is consistent with prior solutions. Another 10 days of below normal rainfall with seasonal temperatures are forecast for the Midwest/Delta. Rain is forecast to drop across the Southern and Central Plains early this week with totals of 0.25- 1.50”. This rain will aid HRW wheat seeding. No frost/freeze risk is indicated for either the US or Canada. The forecast allows the US row crop harvest to start and gain speed in the next few weeks.
- Low volume and pre report position squaring is ongoing. China is importing massive and important amounts of Brazilian corn which is going unnoticed. Demand for US soyoil for renewable diesel demand stays robust. We are leaning bullish for US corn and soy yields on Tuesday. US SRW Gulf wheat is again the cheapest in the world. The US dollar is sharply lower on the rapidly expanding debt pile and likely pause in US lending rates at the next FOMC meeting.