• Short covering from oversold conditions, along with firming cash markets, lifted Chicago soybeans 10-11 cents at the end of the week. Additionally, the USDA announced daily export sales to China and Unknown Destinations, with a combined volume of 31.4 million bu.

• NOPA reported end of September soybean oil stocks at 1,684 million lbs, up 1% from August and 18% higher than a year ago. NOPA stocks typically range from 400-500,000 lbs under total US stocks that are reported by NASS at the end of the month. Implied disappearance from NOPA processors was 8% less than last year. To date, there has not been a significant increase in US soybean oil domestic consumption. However, historic prices have also not had a tremendous impact on disappearance either. The buildout of the US renewable fuel industry is still in its infancy and expected to produce a massive increase in US vegoil consumption in the years ahead.

• Seasonal trends for both cash and futures are higher, and we expect a recovery is underway. Initial sales targets are at $12.80-13.20 basis November soybeans.

• Chicago corn futures ended 7-10 cents higher and ended the week just marginally lower. The post-USDA recovery has been swift, and indeed the outlook has turned more positive. Bearish USDA data has been digested. There is little doubt autumn/winter consumption rates will be impressive. We hear of Chinese interest as futures there exceed $10/bu. China aside, there are just few options for global feed importers. Gulf corn ends the week offered $15/mt below Ukrainian origin and $55/mt below Black Sea feed wheat.

• US export sales through the week ending Oct 7 totalled 41 million bu, a full 10 million above the pace needed to meet the USDA’s forecast. US corn export demand typically rises in autumn and peaks in the Dec-Jan period. Ukraine’s ongoing harvest delays will keep US corn highly competitive into late year.

• The big question now is whether total US corn consumption can exceed USDA’s forecast by 250-300 million bu, which would wipe out USDA’s projected increase in stocks. Our bet is that demand will be lifted in subsequent reports as export sales stay strong and ethanol production is maximised in the near/medium terms. Breaks continue to be opportunities for end users.

• US wheat futures ended 9-13 cents higher, led by spot KC, as the major exporter balance sheet continues to tighten. We hear of light but continued interest from China for US SRW. US export sales were a robust 21 million bu, a 5-week high and well above the pace needed to meet the USDA’s forecast. Ultimately, we expect the USDA to lower exporter wheat end stocks another 3-4 million mt as global import demand is more accurately assessed. Wheat remains a bull.

• The EU market should lead over time. Cumulative Jul-Sep EU wheat export shipments are estimated at 8.5 million mt, up 45% from last year. The pace of EU demand must be slowed to keep domestic stocks adequate, and the most logical solution is to shift importer demand to the US beginning in early 2022.

• We would also note that managed funds on Tuesday were short a net 8,500 contracts in Chicago. This position has only been partially covered. Similar to recent years, the spec community is expected to establish a decently sized long position in winter/early spring. It is imperative to use breaks to add to supply coverage.

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