- Soybeans fall to sharp losses which drags down grains; Non-US corn export basis soars; GFS weather forecast warmer/drier at midday.
- Selling in the soy complex has pulled Chicago lower at midday. November soybeans have declined to $9.64 as the market absorbs the additionality of 1.0 million acres of US soybeans from yesterday’s August crop report. November soybean futures appear to be heading to $9.50, the old price highs looking backwards to the US/China trade war back in 2018-2019 when US soybean stocks swelled above 1,000 million bu. Corn and wheat futures are followers at midday of the acute weakness in the complex.
- Chicago is in a bearish trend on record large US corn/soybean yields and the loss of 900,000 acres each of corn/wheat is not enough to turn nearby price trends. However, US and Paris wheat futures are back against their old lows, but Russian fob spot price bids are steady at $222/mt with offers at $223/mt while Ukraine 11.5% wheat is $3/mt higher at $217/mt. Whether it be Ukraine wheat or corn, their values keep rising which has taken the pressure off of Russia to lower their offers to gain world demand. Our point is that world prices of wheat are not declining, it is Chicago/Paris futures markets that are being pressured by managed money selling in sympathy with record large US row crop harvests. The close today in US and Paris wheat futures is important if price does not close in the bottom quarter of the day’s range. Wheat followed by corn should be indicators of a trading low if values bounce near at the close.
- USDA/FAS announce the sale of 132,000 mt of soybeans to China and 137,000 mt of corn to Mexico. China is asking for additional US soybean offers at midday for October/November while Mexico is expected to buy similar amounts of US corn to this year’s record 850 million bu due to an ongoing drought across Northern Mexico. China has shipped out Brazilian corn, but totals are well behind last year. Brazilian corn basis is up 11 cents this morning at $1.15 over September while Ukraine corn offers are up 4 cents to $1.49 over. US Gulf corn at 84 cents over September is a bargain being $0.31/bu cheaper than Brazil and $0.65/bu cheaper than Ukraine. It is the sharp price rally in non-US corn origin offers that looks to underpin Chicago corn on weakness. Brazilian soybeans for September are offered at $1.48/bu over, up 8 cents on the day.
- Chicago brokers estimate that managed money has sold 5,900 contracts of corn, 6,100 contracts of soybeans and 3,100 contracts of Chicago wheat. In the products, funds have sold 3,600 contracts of soyoil and 3,100 contracts of soymeal. Managed money is adding to an already large net short Chicago position.
- The Central US midday GFS weather forecast is slightly drier and warmer than the overnight run. Hurricane Ernesto is further east with landfall across the Canadian Maritimes early next week as a category 2 or 3 hurricane. A high-pressure ridge bulges northward across the Central US which produces another round of extreme heat/dryness for the Plains and the SW Midwest. And the Delta/Plains stays generally dry. Thankfully, Central KS has received some needed rain in the past 24 hours. The various weather models are showing run to run variability and confidence beyond the next 7 days is low. However, if there is a theme, it is for a Central US ridge.
- Non-US corn basis offers keep soaring which places the US in an strong export position going forward. China remains active in booking US soybeans with yield determined by the next month of Central US weather. Look for the grains to bottom before soybeans amid improving demand.