- HEADLINES: Tepid volume as traders measure US yield results; Weekly US export sales as expected; Better rains heading for the Central US in late October.
- Chicago futures are mixed at midday with soybeans/soyoil higher while wheat futures are slightly lower. Corn is trading either side of unchanged not knowing whether it should follow the rally in soybeans or the fall in wheat.
- Chicago volume remains constrained with large orders able to push the market in one direction or the other. Soyoil stays our bullish stalwart on the rapid expansion of US renewable diesel demand. The US cannot afford to export any soyoil, due to the coming fight for supply between US food producers and the US biofuel industry. Complicating the fight is the rally in spot crude oil futures above $90.00 with cash diesel prices at a yearly high. As US crude oil refiners switch their operations to heating fuel (less diesel), the need for additional US diesel supply increases. Friday’s NOPA crush report will be key in determining the US off take rate of soyoil for US bio and renewable diesel.
- Chicago brokers estimate that money managers have sold 2,300 contracts of corn and 4,200 contracts of wheat, while buying 2,200 contracts of soybeans. In the products, funds have bought 1,900 contracts of soymeal while selling 1,200 contracts of soyoil. Meal/oil spreading provided some early pressure on oil.
- There were early day rumours that Ukraine was preparing to load out 3 large 50,000 mt+ vessels with corn from an Eastern European port and Odessa. Most European cash traders have heard the rumours, with some suggesting that the corn is destined for China. Cash sources cannot confirm that any vessel will be loading at Odessa, but the hint that some vessel owner would be willing to take the risk of loss heading to a Ukraine port post the ending of the Black Sea Grain Corridor pact is intriguing. We will obviously continue to monitor Ukraine and Eastern European port activity for confirmation.
- US grain export sales for the week ending Sept 7 were 16.1 million bu of wheat, 29.7 million bu of corn, and 25.9 million bu of soybeans. For their respective crop years to date, the US has sold 305.4 million bu of wheat (down 70 million or 19%), 439 million bu of corn (down 45 million or 9%), and 612 million bu of soybeans (down 317 million or 34%). Obviously, the biggest decline to date is in soybeans as Brazil continues to offer soybeans below the US from the Paranagua corridor.
- Northern Brazilian farmers are getting worried about dry soils and near record heat with the 2023 soybean planting season starting tomorrow. The Lula Government allowed a few large Mato Grosso farmers to start soy seeding a few days early, but the other farmers that planted ahead of Sept 15 are receiving letters and may have to pay a penalty. Normally, Mato Grosso farmers like to have their soybeans seeded by mid-October so that winter corn can be seeded in the closing days of February or early March. Otherwise, winter corn runs into the end of the end of the wet season in late April and yields fall sharply.
- The Midwest weather forecast is little changed with limited Midwest rain over the next 5-6 days. Any rain will be confined to the Southern Plains. The Midwest/Delta harvest will be accelerating amid the dry/sunny weather trend. High temperatures will be in the 70’s and 80’s and rise back to the mid 70’s to the lower 90’s next week as a ridge of high pressure builds back across the region.
- Improved rain will fall across the Plains and the W Midwest beyond September 18 with accumulations of 1.50-2.00”. There continues to be signs of improved rain across the entire Midwest in the 11–15-day period which could aid the flow of the Mississippi River. No Gulf Hurricane prospects are witnessed in recent model solutions.
- September futures go off the Chicago board today. The next Canadian crop production estimates are not released until December. Debate on the Canadian crop size will continue. Canadian harvest results point that WASDE estimates are close to correct. US farmers are starting their harvest of corn and finding that yields are below their hopes. Soybeans are also finding additional disease pressures as the crop rapidly dries down. We remain bullish soyoil followed by soybeans and wheat.