- Midday Chicago futures are mixed in a reversal of Monday, corn and soybean futures are higher with wheat slightly lower. The volume of trade has declined from prior days as traders exhale trying to try to understand S American weather against firm world cash markets. We look for a mixed Chicago close as US farmers sell corn/soy off the combine while strong world cash basis bids offers support. The bulls and bears are likely to watch the markets thrash back and forth in market consolidation.
- Chicago brokers estimate that funds have bought 4,300 contracts of soybeans and 4,900 contracts of corn, while selling 1,400 contracts of wheat. In soy products, funds have bought 2,300 contracts of soyoil and 2,800 contracts of soymeal. Fund managers have been much less active this morning.
- The USDA reported that 110,000 mt of US corn was sold to Mexico. There were no new US sales reported to China. We hear that China has booked another 3-4 boats of US soybeans with 2 boats being sold off the PNW for January. Rumours remain that China has interest in US Gulf corn, but no new purchases can be confirmed. Everyone has a different take on a China corn TRQ rumour.
- US export inspections for the week ending October 8 were; 24.9 million bu of corn, 79.2 million bu of soybeans, and 18.9 million bu of wheat. China shipped out 59 million bu of US soybeans or 75% of the total. In corn, China took 1 cargo of US corn off the Gulf, not as much as expected.
- For their respective crop years to date, the US has shipped out 170.0 million bu of corn (up 71.3 million or 72%), 334.2 million bu of soybeans (up 144.5 million or 76%), and 383.5 million bu of wheat (up 34 million or 11%). The US wheat export pace has started to lag while US soybean loadings during October/November are expected to be record large. China is now covering December/January soybean import needs and a grain (either corn or wheat) has to take over the demand pace leadership if the demand bull market is to persist.
- Russian 12.5% wheat is offered for November/December at $247/mt or $6.72/bu which is steadier than prior days. French wheat is cheaper at $244/mt while US HRW Gulf wheat is offered at $268/mt, a new 5 year high. And China domestic wheat prices continue to rise following their holiday and rests at a new yearly high close to $11.00. The point is that US wheat traders are rightly focused on the SW Russian weather forecast where rain is needed for seed germination. Yet, world wheat prices are not backing off with Russian interior flour prices at new record high. It will be difficult to break US wheat futures prices until world wheat prices seasonally peak and start to retreat.
- Midwest farmers will finish their 2020 soy harvest during the weekend. We estimate that 62-65% of the US soybean crop and 44-47% of the US corn harvest is completed through Sunday. The Northern Plains farmer is cultivating fields that are harvested or have been in the Prevent Plant program for the past 2 years. The autumn setup is favourable for expanded 2021 US seeded acres.
- The Central US forecast is drier than the overnight run with less rain for the Central and Eastern Midwest. The models have extracted 0.25-0.75″ of rain. Cool to cold temperatures will flow southward with highs retreating to the 50′s/60′s with lows in the 30′s. The chill/dry weather will quickly advance the remaining harvest.
- Volatile and wide-ranging Chicago trade is expected in coming weeks as the bulls look for a grain (either corn/wheat) to become a new demand driver as China’s soybean purchase origin shifts to S America. Brazilian and Russian weather forecasts are important to price and less certain at midday.