- The bullish macro tailwind provided by a $6.00/barrel higher crude oil market has lifted Chicago corn and soyoil (the biofuels) to moderate daily gains. Soymeal futures are sinking while US wheat futures are enjoying additional fund short covering amid the firming Black Sea wheat marketplace. The rally in the Ruble placed a bid under Black Sea cash wheat with values rising $2-3/mt to $185-187/mt for November according to cash sources. The bounce in Russian wheat fob offers is underpinning US wheat futures values. The volume of trade is modest this morning with cash selling orders noted above $3.75 December corn and $9.10 November soybeans. The expectation is for a mixed close with the market awaiting additional details on China’s demand for US soybeans.
- Chicago brokers estimate that funds have bought 5,500 contracts of corn, 3,900 contracts of wheat and 2,200 contracts of soybeans. In soy products, funds have bought 3,400 contracts of soyoil while selling 1,500 contracts of meal. Short covering from managed money in corn/wheat are the big morning features.
- The USDA did confirm that China secured 256,000 mt of US soybeans. This takes their total purchases in their latest round to around 460,000 mt or a little over 8 cargoes. Rumours persist that private Chinese importers have secured at least 2 million mt of US soybeans since tariffs were removed on Thursday. However, the spread between the US Gulf and Brazil has fallen 45 cents in just 3 trading days. Brazilian soybeans for October or priced at 77 cents over November Chicago futures vs the US Gulf at 28-30 cents over this morning. China will take some 6.2-6.7 million mt of soybeans on average per month for an annual import total of 78-80 million mt in our estimation. This compares to WASDE which is forecasting 2019/20 China soybean imports of 85 million mt.
- US export inspections for the week ending Sept 12 were; 16. 6 million bu of corn, 24.5 million bu of soybeans, and 16.8 million bu of wheat. China shipped out 7.6 million bu or 32% of the weekly soybean export total. These were old crop sales that were rolled forward to new crop.
- For their respective crop years to date, the US has sold 35.2 million bu of corn (down 32.7 million or nearly 50% from last year), 45.5 million bu of soybeans (down 14 Mil Bu or 23%), and 274.5 million bu of wheat (up 50 million or 22%). The slow US corn and soybean export pace is expected to worsen in coming weeks. China’s purchases of US new crop soybeans are said to be for November/December.
- Dry weather in Europe is causing difficulty with winter grain emergence across; France, Germany, Bulgaria and Romania as soil moisture is short.
- US president Trump has backed a plan that would raise 2020 US Biofuel quotas 10% to compensate for the exemptions handed out to 31 refineries that received waivers. The plan would raise US total domestic mandates for biofuels to 22.4 billion gallons from just over 20 billion this year. Yet, the proposal does not consider RINs and how they could be used to fulfill the elevated yearly obligations. This is rumoured to be a 3-year plan.
- The midday GFS weather forecast is wetter in the Midwest with widespread totals likely across; IA, IL, IN, OH and WI. However, there is no indication of soaking precipitation that would delay early harvest efforts into Sep 25. The Midwest temperature pattern will be warm over the next 2 weeks. There is no evidence of a frost/freeze into early October.
- China is still out on holiday which is limiting soy trade. Corn/wheat values are firm on the worry over rising world energy prices due to the simmering geopolitical landscape. Will the US respond against Iran? The loss of Saudi oil production will underpin world energy prices.