- Chicago is mostly lower at midday with corn/soybeans weaker, while the wheat market trades on both sides of unchanged. The volume of trade has been below yesterday and somewhat more two-sided. Funds were early buyers, but when the early rally failed, the selling stepped up during the midday hour. The prospect that the US harvest will resume across the W Midwest in the next 36-48 hours along with stepped up cash corn selling sparked Chicago selling this morning. US farmers could be going “full bore” with harvest on the weekend which is likely to continue next week. US corn/soy harvest will likely reach more than 50% through Sunday, a data point that may interest speculators (once again).
- Chicago brokers estimate that funds have been sellers of 4,200 contracts of corn, sellers of 4,300 contracts of soybeans, whilst being flat in wheat. In soy products, funds have sold 3,200 contracts of soymeal whilst buying 1,000 contracts of soyoil. Oil/meal spreading was noted early this morning.
- We note that spot Chicago oat futures are back above $3.00/bu and testing their 2017 highs. A close above $3.12 would turn all longer-term chart patterns bullish. World barley prices rest at record highs today, and now oat values are sitting at just a 72-cent discount to corn. The message is that world wheat and small grain stocks are tightening, and that additional seeded acres are needed. We suspect that oat values may be making a statement on future corn and wheat values.
- If US legislators cannot pass a new Farm Bill before early December, they will be forced to pass a one-year extension of the 2014 Bill. Ahead of the Midterm election, the odds of succeeding with a new Farm Bill are dim. The odds-on bet at this time is an extension which will help in refunding existing programs.
- Russian fob wheat prices keep grinding higher on tightening supplies with November offered at $234/mt. Russia has been acting like it has a 50 million mt exportable wheat surplus (which is realistically closer to 25-30 million mt). The rush to push quality wheat out the door is one reason why the Government will have to place a duty or some other restriction on its wheat exports. The time for a switch from Russian wheat to other origins will likely occur in the next few weeks.
- The midday central US weather pattern shows that a ridge/trough pattern will persist across N America for the next two weeks. The pattern will allow for improving harvest conditions as soils firm. We note that very cold air evident today will moderate heading into the weekend. Highs will return to the 50’s, 60’s and lower 70’s which will help facilitate drying. Forecasts offer wide open harvest conditions into the closing days of October. Any moisture will be focused on the SE Plains and through the lower Delta. The 11-15 day period offers mild/dry weather to help finish up the Midwest harvest into the opening days of November.
- Futures contract prices are correcting from Monday’s strong rally amid open harvest weather and slowing demand for US soybeans. Wheat is holding steady as world demand is about ready to shift to the US. Russian/EU and Australian wheat prices keep rising which is placing a supportive floor under Chicago wheat values. Research maintains that US wheat has a bullish outlook as Russian exports seasonally slow. The outlook for rain is poor for the EU/E Russia wheat areas into late October.