- It has been the kind of morning that you would expect following a bearish USDA Crop Report. Chicago futures trade either side of unchanged with fund selling noted on rallies while end users are buyers on breaks. No one wants to stick their necks out too far as the chart patterns are bearish with funds adding to their net corn and soybean positions. US farm selling has shut down on the break and most are now inclined to store as much of the crop as possible amid the hope that the US/China will find some common ground on trade. Details of coming meetings are occurring and will be awaited by the marketplace.
- The US in offering to talk with China is a big change from prior months as the White House has been waiting for China to call them. President Trump is tweeting that the US has the trade advantage, but it’s good to remember that no one wins in a trade war. The US Ag Senate Committee reminded USTR Ag Head Doud of this thinking as he testified this morning. We look for a mixed to lower close with traders now expecting that it will take a few weeks for the Chicago markets to heal before the Sept 28 Stocks and Final Small Grain Production report. The market is waiting on to see what happens with the pending US/China trade talks before deciding if even cheaper prices are needed. Downside price targets are $3.45 December corn.
- Chicago floor brokers report that funds have sold 4,300 contracts of corn, 2,100 contracts of wheat, and 3,200 contracts of soybeans, In soy products, funds have sold 1,200 soyoil and 1,900 contracts of soymeal. The weekly US export sales report showed that the US sold; 14.2 million bu of wheat, 30.5 million bu of corn, and 25.5 million bu of soybeans. The corn and wheat sales were below trade expectations, while soybeans were in line. For the start of the new crop year, 2018/19 US corn sales stand at 597 million bu (vs 413.5 million bu last year), and 625 million bu of soybeans, equal to last year. US wheat sales lag last year by 111 million bu or 24%. Algeria booked 630,000 mt of mostly EU wheat at prices of $262-$263/mt basis CIF. The fob price works back to $238-239/mt, right at replacement.
- The central US GFS weather forecast is wetter than the overnight as Florence comes ashore as a Cat 2 storm and stalls. Heavy rains of 10-20” cause widespread flooding across the Carolinas, but what is different from the overnight run is the activation of the northern branch of the jet stream that produces several strong storm systems across the Central US. This rain will keep harvest slow where rain exceeded 2.0” last weekend. The 10 day rainfall map indicates that a trend of above normal Central US rainfall. There is no indication of any cold air that would pose a threat to immature crops into late September. The last week of September looks to be warm/wet.
- The hangover effect of Wednesday’s bearish USDA crop report is being felt. The Aussie forecast remains dry while a few showers dot portions of W Russia. Traders are awaiting details of the coming US/China trade talks. But, few expect there to be much progress. Chicago is in liquidation and with spot corn to take aim on the 2017 lows at $3.30, even amid US and world stocks that are substantially tighter. Funds are liquidating wheat while Russia remains an active seller with the next support in Dec KC wheat being at $4.90.