• HEADLINES: Chicago mixed at midday; China continues wheat buying spree; Soy export demand remains tepid.

• Chicago grain markets are mixed at midday, with the soy market retreating from Thursday’s dramatic rally on tepid export demand, wheat adding premium on newfound interest for US origin from China, and corn caught in between. Participation rates remain lacklustre. Position squaring dominates price discovery on Friday (profit taking in soy, short covering in wheat), and we would maintain that it is S American weather that is key to direction moving forward. Still no pattern shift is offered to S America into Oct 22, with the GFS weather forecast keeping arid/hot weather in place across C Brazil into Oct 26, and Brazilian/Argentine crop progress data is important moving forward.

• The US dollar index continues its recovery from Wednesday’s lows. US CPI data and a worsening of conflict in the Mid-East sustains a flight to safety. Spot WTI crude oil is up $3.50 at $86.40. The Dow is up 145 points.

• In the week ending Oct 5, US exporters sold a net 36 million bu of corn, vs. 71 million the previous week. Mexico through the period secured only 21 million bu, vs. 45 million the previous weeks. Net soybean sales totalled 39 million bu, vs. 30 million the prior week. Wheat sales were a sizeable 24 million bu, vs. 10 million the previous week and a new marketing year high.

• China was confirmed to have purchased 8 million bu of US origin SRW and was announced to have secured another 7 million bu this morning. We have heard of more cargoes working to China, and also hear that China has secured upward of 15 cargoes of Aussie origin this morning. China’s wheat/feed market buying spree is beginning to change the complexity of those markets relative to current prices. Additionally, China’s commitment to import 10 million mt of wheat annually via its WTO agreement bodes favourably for US demand amid Australia’s short crop.

• For their respective marketing years to date, the US has sold 602 million bu of corn, up 14% on last year, 371 million bu of wheat, down 9% and 717 million bu of soybeans, down 31%. Brazil’s crush industry is outbidding exporters currently, but the tepid nature of US soy sales to date requires an extension of this season’s export window to validate USDA’s forecast. We would acknowledge that US soy export demand is weak, but it is S American weather that determines market share, and the timing of new crop Brazilian exports, moving forward.

• New crop US soymeal exports sit at 4.6 million mt, up 48% year on year.

• IMEA this afternoon will release Mato Grosso soy planting progress. Soy seeding last Friday was 14% complete, vs. 19% the previous week, and reports are widespread that planting has paused amid recent heat/dryness. It is December weather that determines Brazilian soy yields but seeding delays in Oct have a clear impact on Safrinha planting dates and yield potential. A year ago in Mid-Oct, Mato Grosso’s soy crop was 41% planted.

• Also, key is Monday’s NOPA crush data and whether soyoil stocks continue to decline amid rapid renewal diesel production expansion. There has been nothing to indicate a slowing of domestic soyoil disappearance. Exports must be rationed for a second year.

• The midday GFS weather forecast is further east with heavy rainfall across the Southern US in the 6–10-day period. Totals of 1-3” are now advertised in AR, MN, TN and KY, while TX and OK face another 10 days of dryness. Moderate rainfall moves across the Great Lakes and far E Midwest into Sunday, but thereafter threats to harvest will be minimal into late month.

• USDA’s trimming of US corn and soy yields provide additional support for bottoms having been scored. Seasonal trends are positive into spring, but the speed/intensity of recoveries will hinge upon the duration of unwanted dryness in Argentina and Central/Northern Brazil. S American weather dominates price discovery beginning in late October.

To download our weekly update as a PDF file please click on the link below: