• HEADLINES: Macro headwinds pull Chicago lower at midday; Ukraine export corridor confusion; More China flash soybean demand.

• Chicago grain futures continue to closely mirror the price action in the financial markets. The DOW was trading 300 points higher shortly after the opening only to fall fate to new selling/liquidation. The DOW is down 200 points at midday as intraday market volatility stays high. The US$ stays strong while crude oil futures have posted losses of nearly $3.00/barrel. We look for further weakening of US equity markets as traders fear an aggressive US Central Bank intervention in their war against inflation.

• Early Chicago buying was noted amid fresh talk that Russia was increasing its demands to keep the Ukraine export corridor open, such as exporting Russian fertilizer through Odessa and that Ukraine grain could only flow to countries that are impoverished and in need. Negotiations are ongoing and the mixed signals from Moscow leave uncertainty as to what will happen to marine grain exports from the Ukraine after November 22, the current pact expiration.

• Chicago brokers estimate that funds have sold 4,500 contracts of wheat, 6,500 contracts of corn, and a net 2,300 contracts of soybeans. Fund managers were initially buyers of soybeans but turned sellers as prices slipped below unchanged. In the products, funds have bought 4,300 contracts of soymeal while selling 5,200 contracts of soyoil.

• USDA export sales for the week ending October 6 were 7.8 million bu of wheat, a paltry 7.9 million bu of corn, and 26.6 million bu of soybeans. In the products, there net cancellations of old crop soymeal/soyoil while new crop soymeal sales were an impressive 492,000 mt. US soyoil is the most expensive vegoil in the world and declining export sales will be featured in the weeks/months ahead.

• For their respective crop years to date, US wheat sales stand at 409 million bu (down 32 million or 7%), while US corn sales stand at 528 million bu (down 559 million or 51%) with US soybean sales at 1,037 million bu (up 70 million or 6.4%). The US corn export sales pace is abysmal and argues for USDA should further cut US corn export demand by 150-250 million bu. US soybean sales will be boosted next week following this week’s Chinese activity. 2022/23 US wheat exports look to be at their lowest level in modern history.

• USDA announced new daily sales of 392,000 mt of US soybeans to China and 198,000 mt to an unknown destination for combined sales of 590,000 mt.  The US also sold 230,000 mt of soymeal to the Philippines. China has been an active buyer of December/January US soybeans for their reserve.

• Except for the Southern Plains where 0.25-1.00” of rain look to drop this weekend. The midday GFS weather forecast is dry across the Central US with limited rainfall chances into late October. The US corn and soybean harvest will push ahead quickly, however the flow of the Mississippi River will continue to decline with future draft restrictions becoming more arduous. Progressively colder temperatures are felt through next week with much of the Central US seeing their growing season end. The cold will help the dry down of soybeans.

• The US$ will stay strong with the additional hikes in US interest rates that are ahead. The US Central Bank’s war against inflation is not showing much result and they will stay vigilant to curtail demand. The peak of Central Bank hawkishness is ahead. The US Mississippi River flow will continue to decline over the next 2-3 weeks. Barge costs will stay historically high which in turn pressures domestic cash basis bids. US corn/wheat export demand is horrible, with China’s reserve program securing US soybeans for December/January this week. If Brazilian weather is favourable, Chicago soy rallies fail.

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