• HEADLINES: Chicago higher on correcting US$/strong crude oil; Volume restricted by the holiday;  weather forecast has wetter E Midwest weather.

• Chicago grain futures are higher at midday in thinning pre-holiday volume. Corn, soyoil and wheat are the upside leaders as macroeconomic concern is diminished following the US September Employment report. The report was neutral with 315,000 non-farm payrolls added to the workforce, but importantly, wage pressures grew just 0.4% and there were older workers pulled back into employment. To ease inflationary pressures, additional goods and services are needed along with expanded productivity.

• We see the September Jobs Report as being broadly neutral. We doubt that it changes the FOMC’s mind on a 0.75% hike on September 22 to 3-3.25%. The US Central Bank wants to get ahead of inflationary expectations and keep pressure on price by slowing demand. However, financial markets have taken a beating in recent days and heading into a 3-day weekend, a rally makes sense as traders cover shorts.

• Russian FOB wheat offers have declined for weeks. The downtrend quickened this week on 11.5% protein wheat offered at $289/mt and bid at $285/mt. The Russian wheat export pace will reach 3.8-4.0 million mt in September, well below prior years. The Russians complain that sanctions are inhibiting their grain export pace. It is ocean freight operators and the SWIFT banking system of smaller Russian banks that are causing the slowness. Some Russian watchers wonder if the tepid Russian grain export pace does not cause Putin to back out of the corridor deal when up for review in mid-November. The trade will be closely watching the renewal amid cheapening Ukraine corn/wheat offers that provide competition for the Russian exporters.

• China’s economy continues to stutter as its political leadership shows no willingness to end their zero percent Covid tolerance ahead of the Party Congress in mid-October. As temperatures cool, the incidence of Covid is expected to increase with additional lockdowns anticipated. Recent history shows that China’s economic woes have slowed their purchases and imports of grains and oilseeds. However, hog feeding margins are in the black which could help slow the decline. The key to understand in China is when will confidence be restored to the economy/population. Their supply lines in livestock will need to be refilled at some point, and when they start will be important to Chicago prices. We hear that Chinese supply chains are nearly exhausted on the bearishness that prevails their economic outlook.

• The midday GFS weather forecast is wetter than the overnight run for the E Midwest as Gulf moisture is pushed north into a passing cold front late next week. The forecast is arid through Thursday before the rain arrives.  Light showers will fall across the Midsouth/S Midwest this weekend. Above normal temperatures will blanket the entire Central US throughout the next 10 days. Tropical Storm Danielle has no chance of making US landfall and two additional disturbances are forecast to move northeast prior to hitting the US Coast.

• Selling pressure is easing from macro market concern with the US$ weaker and crude oil higher today. Hedge funds sell commodities amid a rising US$ as the US Central Bank raises rates. We see today’s US$ weakness as a correction on profit taking. The USDA September Crop Report is now 4 trading days away, and few will want to take any new positions until the US corn/soy yield is better determined by actual field surveys. We would position to sell cash corn/soybeans on a bullish NASS crop report amid recessionary economic worry. And the Midwest harvest is ahead.

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