• HEADLINES: NASS raises the 2020 soybean crop by 81 million bu bearish surprise; Wheat stocks bullish; Corn neutral.

• The September Stocks Report was deemed as mixed. US wheat and corn stocks data was viewed as neutral to slightly bullish, while the soybean data was bearish. US 2020/21 soybean stocks were well above market expectations at 256 million bu and this will drive Chicago price direction into today’s close. Grain/soy spreads should rally into the October NASS crop report.

• NASS estimated final 2020/21 corn end stocks at 1,236 million bu, which was 81 million bu larger than the pre report trade estimate, but 683 million bu less than last year. The final 2020/21 US corn stocks were 49 million bu larger than what the USDA was using in September.

• The 2020 corn production was revised down 71 million bu with FSA data indicating that yield should be dropped to 171.4 bushels/acre. The smaller 2020 yield has bullish implications for 2021 US corn yields.

• The Q4 US corn feed/residual total is estimated at 608 million bu which is slightly less than what USDA had forecast. The additional old crop corn bushels will not have a big impact on the 2021/22 US corn balance sheet with new crop yields falling well below NASS expectations. December corn has support under $5.20 with resistance above $6.00. We calculate 2020/21 US annual corn feed/residual use at 5,605 million bu, down from the USDA forecast at 5,725 million bu.

• The bearish shocker was NASS finding any additional 81 million bu of 2020/21 US soybean stocks. NASS adjusted 2020 US soybean production up 81 million bu to account for all the increase. The 2020 US soybean harvested yield was adjusted up by 0.8 bushels/acre to 51.0 bushels/acre with harvested area at 82.6 million acres. The US soybean production gain was one of the largest in years with prior stocks report not reflecting such a production gain. The increase was a bearish surprise.

• The extra old crop stocks and better than expected W Midwest soybean yields opens the market to downside price risk to $12.00 November. Chicago is holding support against $12.50 November currently. Chinese pricing is resting below the market, which is offering scale down support, but there is no doubt that the finding of extra old crop soybeans opens the market to additional downside price risk. We calculate the Q4 US soybean residual at a negative -78 million bu compared to a positive 10 million bu for the quarter last year.

• September stocks are known for US corn/soybeans. The demand driver of renewable diesel will offer scale down support in vegoil prices. However, the bearish soybean stocks could be compounded by the better-than-expected soy yields from the W Midwest. Soy futures will be the bearish drag on Chicago. There is $0.50-0.75/bu of downside price risk based on today’s September Stocks data. Corn/soy and wheat/soybean spreads should perform in the coming weeks.

Sep 1 US Stocks (million bu)

2019        2020         2021

Corn            2,221        1,919        1,236

Soybeans     909          525           256

Wheat          2,346        2,158        1,780

• NASS wheat data was released generally as expected but is viewed as bullish, nonetheless. Final US wheat production is pegged at 1,646 million bu, vs. NASS’s prior estimate of 1,697 million. Sep 1 US stocks totalled 1,780 million bu, down 378 million from last year. Jun-Aug wheat feed/residual is calculated at 256 million bu, the highest since 2016/17. This helps explain that rapid recovery in values during summer, as record low exporter stocks/use triggered to market to halt elevated feed use altogether. Total Jun-Aug US wheat consumption totalled 732 million bu, vs. 726 million last year and also the highest since 2016.

• The USDA in its Oct report will lower US wheat end stocks by 40-50 million bu, and the lack of the US market’s access to imports will assure 2021/22 US wheat end stocks at or below 560 million bu. Wheat retains its status as the global ag market’s bullish leader. We note that world futures followed the US higher, with newer highs scored in Europe at midday. USDA will also lower its wheat exporter stocks/use to a record low 12.5%, vs. 15.3% in 20/21, based on coming adjustments to US and Canadian balance sheets.

• The 2021/22 US soybean balance sheet has loosened immediately amid larger carryover stocks. Corn’s balance sheet remains tight and end stocks fall to pipeline minimum if yield is lowered just 2 bushels/acre in the Oct or Nov reports. Additionally, we look for end users to use this break in soybeans to add to autumn/winter supply coverage, with China still very short bought.

• HEADLINES: Chicago boosted by international markets; US crude oil stocks still very tight.

• Chicago ag markets are higher at midday as macro financial markets provide support. More importantly, international, and minor ag markets continue to provide bullish guidance for US corn, wheat and soybeans. It is clear an intense battle for acreage lies ahead, in the US and elsewhere, and this makes coming USDA data all the more important. There will be little tolerance for reduced US carryover or 2021 yields. Corn and soy futures today are trading fair value as determined by USDA balance sheets, but major changes are possible in the next 30 days. Disappointing US and Ukrainian corn yield data lingers in the background.

• Canadian and European rapeseed/canola markets are up sharply, with spot EU rapeseed finding new contract highs at $750 per ton. EU rapeseed has rallied a full 10% in the last 30 days and is now valued at a premium of $280 per ton (60%!) to spot Chicago soybeans. We maintain that world rapeseed and rapeseed oil users must simply go without supply this year due to crippling drought in Canada. Dec Chicago oats remain perched above $5.80, with Dec cotton finding a new 10-year high at $1.02 per pound.

• And Europe’s corn market has been one of the better performers during the month of September, with Nov MATIF corn finding newer contract highs this morning. Unwanted soaking rainfall of 2-4″ will impact France and western Germany Sun-Wed. This region accounts for roughly 30% of total EU corn production. Harvest in France is unlikely to surpass 10% complete in the next 10 days. Europe’s grain supply issue will stay intact until corn harvest is complete in November. A pattern of lingering rainfall is also being monitored across China’s Central Corn Belt. Rainfall there of 3-7″ over the next 10 days will at the least delay harvest.

• US ethanol production through the week ending Sep 24 totalled 269 million gallons, vs. 272 million the previous week. The lack of available old crop corn supplies has kept weekly grind rather deflated since late August. Yet, there remains a sizeable need for elevated production amid tight ethanol stocks. US gasoline disappearance last week was 9.4 million gallons per day, up 10% from the same week in 2019 and up 3% from 2019. Recall that work suggests gasoline use at/near pre-Covid levels requires an annual corn grind of 5.30 billion bushels, vs. USDA’s currently projected 5.35 billion. Corn’s demand outlook is bright.

• US crude oil stocks last Friday totalled 419 million barrels, up slightly on the previous week but down 15% from a year ago. Spot WTI crude at midday is up $0.05 per barrel at $75.30. Spot RBOB gasoline is now quoted at a $0.02 per gallon premium to Chicago ethanol. US ethanol also maintains a modest discount to Brazilian origin in the world marketplace.

• The midday GFS weather forecast is drier in IA and across the far Upper Midwest but is otherwise unchanged. Needed rainfall of 0.25-1.75″ will be spread across much of the US HRW Belt Thurs-Sun. This system expands into Delta region and eastern Midwest early next week. A temporary slowing of harvest occurs across the Delta, KY, TN, IL and IN but lasting delays are not indicated. A pattern of Central US warmth and dryness resumes Oct 5-10. Max temperatures today and tomorrow across the Plains and Western Midwest will reach into the low/mid-80s.

• Amid rapid harvesting in the US, final old crop corn and soy stocks and new crop production will be largely known in the next 10-15 days. Downside risk now hinges entirely upon NASS yield estimate, as otherwise seasonal price trends point upward, and international cash markets better reflect global stocks tightness. Any post-USDA weakness should be used to boost supply coverage further.

• HEADLINES: Macro weakness spills into ag markets; EPA uncertainty persists; Midwest weather forecast trends wetter.

• Chicago values are weaker at midday with corn, soybean and wheat futures failing on an early rally attempt. The soybean market has been the downside leader as China did not show up with fresh US purchases. US exporters have 48 hours to report sales, but the lack of sales sparked a round of early selling amid the advancing Midwest harvest.

• And crude oil futures turned lower (and corn appeared to follow crude to the downside). The DOW is off 500 points as worry over the US Government shutdown and debt limit hike rattles traders. The US 10-year note traded as high as 1.56% as Fed Chairman Powell indicated that Central Bank Bond purchases could be tapered as soon as November. The inflation bar has been reached for the Fed to start cutting back on its bond buying program. This rallied the US$ with the December futures contract at a new contract high. The financial headwinds and the coming September USDA report sparked Monday’s buyers to be Tuesday’s Chicago sellers. Support is offered in December corn below $5.31 while November soybean at $12.70, while KC December wheat should uncover demand below $7.05.

• The USDA reported the sale of 150,000 mt of US corn to Mexico. No Chinese soybean sales were noted, even with US exporters reporting fresh demand on Monday. We are hearing fresh interest from China on today’s weakness.

• Democratic Senators are calling on the Biden Administration to reverse their EPA position on cutting biofuel mandates from 2020-2022 as they argue that it would threaten the US farm economy. The OMB is scoring the cuts, with an announcement expected in October. The Senators argue that the cuts would undermine Biden Climate Change Initiative. The democratic House and Senate need to hold together in their vision for there to be any chance on passing the stack of legislation that is pending. Biden’s EPA may choose to further delay any announcement until after several key legislative votes occur.

• Argentina has approved Bioceres’ HB4 GMO wheat back in October of 2020 for production. However, as the harvest of the Argentine winter crop nears, importers and end users are objecting, with Argentina’s biggest wheat importer, Brazilian millers, claiming that they will not secure the GMO wheat. Other key world importers including North African countries are also reviewing their import policy knowing that a very small portion of the Argentine crop could contain GMO seed. USDA has Argentina exporting 13 million mt of wheat, so the countries that allow or reject GMO wheat seed will be important. We have no way of knowing how this all falls out, but it is something that everyone must follow. The world does not have the availability for widespread switching in 2021/22 amid tightening protein supplies in the EU and Black Sea.

• The midday GFS weather forecast has again shifted near-term rainfall eastward into the Central Plains and bulk of the Midwest. A pattern of moderate but lingering rainfall impacts this area Thurs-Sun, with accumulation pegged at 0.25-2.00″. Favoured areas will include the eastern Plains, AR, MO, IA and IL. The pace of corn/soy harvest slows in the near-term, but widespread dryness resumes Oct 4-8. Summer-like temperatures will be ongoing, with max highs to reach into the low 90s across the Plains today and tomorrow. Unfortunately, coming rainfall does not extend into E CO, W KS and W NE, but a majority of the US HRW Belt sees a rejuvenation in topsoil moisture.

• Potentially large adjustments to 2021/22 US corn and soy carryover, along with final US wheat production, are due in just 48 hours. Choppy, mediocre-volume trading occurs in the meantime. Work suggests odds are high that final 2021/22 stocks are trimmed, which along with positive seasonal price trends keeps our strategy of buying breaks intact.

• HEADLINES: This morning saw rising global energy values, which should add support to ag commodities; Russian wheat values rise for 11th consecutive week; Corn rallies to best daily gains since early August; China buys additional US soybeans; Golden Week Holiday.

• Sharply higher corn with wheat/soy values following are the Chicago market trend. Tightening cash markets (limited farmer selling) along with rumours that China may be looking to make large purchases of US soybeans/corn has lifted values. December corn is testing its 50-day moving average at $5.42 while the 100-day moving average rests at $5.52. November soybeans have tested the psychological $13.00 resistance while KC December wheat runs into selling above $7.25 on wetter weather forecasts for the S and C Plains. The USDA Stocks and Final Seeding report looms, but the thesis appears to be that corn/soy futures have scored their seasonal lows with disappointing harvest yields and limited farm selling offering support.

• China’s Golden Week Holiday starts on the weekend with China out for most of next week. This suggests that Chinese ag buying is likely to be concentrated in the days leading into Thursday’s USDA’s Stocks Report. FAS/USDA reported the sale of 334,000 mt of US soybeans to China in the 2021/22 crop year. This was the largest single purchase in over a month.

• The release of the CFO of Huawei was important in soothing the US/China political relationship. US exporters report that China may return the favour with the purchase of US ag goods including soybeans, meats and even corn. We hear that China did secure another 5-7 cargoes of US soybeans today for November forward. It is nearly impossible to find any fob/cif offers for October as Gulf elevations are sold out. Getting the closed Gulf exporters back online will be key in early October to making sure the US can fulfil the existing sales program.

• US export inspections for the week ending September 23 were; 20.4 million bu of corn, 16.2 million bu of soybeans, and 10.5 million bu of wheat. Slowly and surely the Gulf is coming out its Hurricane Ida mess. However, it will still be a few more weeks before US weekly exports reach back to 80-85% of the pre-Ida normal.

• US farmers are not selling the rally with merchandisers suggesting that it will take $5.50-5.60 December corn and $13.25 plus November soybeans before farmers engage in new cash sales. The lack of cash selling reflects disappointing yield trends with farmers using the market to boost revenue. Normally, in a double-digit corn rally, farmers would price new crop harvest.

• World energy prices are spiking higher (WTI crude oil reaches $75.73 basis November which is causing fertiliser exporters like China/Russia to restrict exports. SOE’s (State Owned Enterprises) in China were told to halt fertiliser (urea/phosphate) exports due to rising costs and tightening supplies. Worry over input costs is rising.

• The midday GFS weather forecast is drier across the W Plains, and wetter for the Midwest compared to the overnight run. The midday GFS forecast indicates that rain would miss the driest wheat areas of the HRW late this week. Above to much above normal temperatures are forecast to persist into mid-October. The Midwest rain come with winds which would cause some toppling of E Midwest corn.

• Someone wants to be long of corn. There is no one fundamental reason why corn is rising, but a host of them including positioning for Thursday’s Stocks report, lower than expected E Midwest corn yields, and the potential for a lower Ukraine corn crop (no larger than 36 million mt compared to the 39 million USDA September estimate). Also, China’s 2020/21 corn imports from all origins will be raised to 29-29.5 million mt with world stocks to decline a like amount. We have no idea on whether China will secure US corn as a payback from the weekend political thawing. A test of $5.45-5.50 December lies ahead with Thursday’s report then determining if the rally accelerates. Wheat and soybeans are trying to follow but lack their own leadership today.

• HEADLINES: Chicago mixed in slow volume ahead of active harvest weekend; Ukraine corn yields are disappointing.

• Chicago is mixed at midday in thin volume. Short betting traders are expecting pre hedge selling in corn ahead of an active weekend of Midwest harvest. The harvest is fast, but cash connected selling said to be limited, a surprise. Some cash corn is being sold in the Plains/Missouri, but otherwise, producers are storing or filling contracts which has forward cash bids firming. In fact, ethanol plants are starting to become more aggressive in future corn bids with their concern that harvest progress will reach past 50% in early October- and they have not booked their desired volumes. Amid the open/dry forecast, farmers are choosing to just push ahead on corn and then move to soybeans. Some IL and IN farmers will finish their corn harvest next week. Producers continue to report disappointing corn yields. Corn and soybean yield data points to a declining trend, it is a question of degree for the October report.

• Rising energy prices are also in the minds of traders as WTI crude has rallied to near $74.00 on tightening supplies and the coming cold season across the Northern Hemisphere. Coal values are at record prices in China and gas prices are at records in Europe. Comparatively, ethanol/biodiesel appear cheap, and funds are looking at what are the cheapest BTU units that can be purchased.

• It has been a very slow trade in Chicago to date. Funds have bought 2,200 contracts of wheat, 1,800 contracts of corn, and 1,100 contracts of soybeans. In soy products, funds have bought 3,100 contracts of soyoil while selling 1,200 contracts of soymeal. December soyoil is trading above its 20-day moving average with the next target being $0.6009, the 50 day average. Soyoil appears to be rising as being the primary feedstocks in biodiesel.

• It will be interesting to monitor the Chicago close in terms of pre hedging ahead of the harvest weekend. Most traders are positioning for this pre hedge, and if it does not develop, prices could rise on speculative short covering.

• China’s ban on crypto currencies, calling them illegal, no matter whether they are held on or offshore has pummelled the value of Bitcoin by 6% and other digital coins by as much as 8-12%. Although the announcement was only 4 hours ago, the market move has been swift as Chinese investors flee the asset. The fall in digital currencies is slightly bearish on raw material values.

• We would remind that China’s electrical shortages and the taking of several crush producers offline, can easily be made up by others. China has about 40% more crushers than they need which is always a bearish omen for margins. Thus, be careful with trying to determine how much (if any) Chinese soybean imports to reduce via their domestic energy shortage.

• Ukraine corn yields with 4% of the harvest completed are just 77.2 bushels/acre. The early Ukraine corn yield is slightly better than last year, but well below the 115 bushels/acre that the USDA is forecasting for the entire harvest. On average, corn yields rise in Ukraine as the harvest advances, but if yield does not start rising sharply in ensuing weeks, the USDA is overstating the 2021 Ukraine corn crop at 39 million mt with exports at 32 million. Amid the global shortage of feed, the size of the 2021 Ukraine corn crop is of real importance.

• The midday GFS weather forecast is wetter across the E Plains, and drier west compared to the overnight run. This would miss the driest wheat areas of the HRW. Above to much above normal temperatures are forecast to persist into mid-October.

• Low volume into an active harvest weekend is pressuring corn/soybean futures at midday. If the cash related hedge pressure does not surface before the close, a bounce will follow. It is the September Stocks report next week and whether the US Government can stay open which will key longer term direction. This week’s higher close in the “gut slot” of the Midwest harvest is impressive. Wheat/corn are favoured.

• HEADLINES: Wheat rises on demand talk while corn jumps on new fund cash inflows based on the cheapness of ethanol/crude oil values vs. coal/natural gas.

• Early selling uncovered consumer buying in corn/soyoil which has rallied Chicago values into the midday hour. Funds appear to be better buyers as chart patterns slowly start to turn to the upside. Wheat has been the upside leader amid rumours of Chinese buying of US wheat (told 1-3 cargoes) while US farmers have not been parting with much cash corn with an estimated 20% of the harvest completed through Friday. US farmers are making fast time in harvest, it is just that they are not willing to make new cash sales. Merchandisers report that farmers are targeting the $5.50 level basis December corn and $13.00 level in November soybeans for new sales. The lack of farm selling, and end user pricing has lifted Chicago values from early day lows.

• Goldman Sachs noted that they did not expect the US Central Bank to raise interest rates in 2022 and that its commodity head forecast $80 crude this winter with a chance of reaching $90 if the US winter was particularly cold. Natural gas, coal and a host of other energy products are soaring on a global basis. Chinese thermal coal prices have rallied sharply amid the political slowing of Australian coal due to their purchase of a nuclear submarine from the US. The US$ fell sharply on the “lower for longer” US interest rate outlook.

• Amid rising energy and wage values, and steady US interest rate outlook, the winds of inflation are blowing which will entice managed money to consider commodities into the beginning of 2022. Remember that Chicago open interest is at the lowest level since 2017 in terms of corn, soybeans, and wheat. The stage is set for additional managed money to look at Chicago as energy values are set to rise even more. Crude oil is the cheap energy today and stocks are expected to fall sharply in the weeks to come. This will make ethanol and corn look cheap on a comparative basis.

• The US sales in the week ending September 16 were 13.1 million bu of wheat, 14.7 million bu of corn, and 33.2 million bu of soybeans. This was the third week in a row that US corn sales were disappointing. For their crop years to date, the US has sold 396 million bu of wheat (down 99 million or 20%), 982 million bu of corn (up 93 million or 11%) and 852 million bu of soybeans (down 449 million or 34%). US corn export sales are the second largest on record, while US soybean sales are down and falling behind even more (relative to last year).

• The rise in world energy values should not be overlooked heading into winter. Chinese coal or EU gas prices are sitting at record highs, this will speed the story for renewables during 2022 to helping to balance out the supply chain. Chinese crushers worry that their power will be cut while hog producers are concerned about future meal supplies. Our point is that the energy bull story makes next week’s US September corn stocks and the October NASS corn yield estimate more important. There is no room for US corn supplies to fall.

• The midday GFS weather forecast is wetter across the N Plains, compared to the overnight run. The GFS forecast has added rain for late September and early October which would be ideal for planting Plains wheat. The EU model also hinted at increasing showers for the Plains but was less specific on amounts. Above to much above normal temperatures are forecast to continue into mid-October.

• New money appears to be coming at Chicago from hedge fund players as the sharp rise in natural gas, coal, fertiliser prices has attracted the attention of investors. The flow is just starting, but corn ethanol and crude oil are the cheap energy sources today. This is a big reversal of prior years and energy costs through winter will further hike the monetary demands of workers (wages). World wheat values are rising on tightening world supplies, but should needed rain fall across the Plains, a correction could ensue. Russian winter wheat areas have received some nice rains in the past week. We maintain that it is the September Stocks report that will determine the speed of the post harvest recovery.

• HEADLINES: Biofuel mandate report from Reuters hits bio-crop values; Chicago recovers on enlarged 2022 mandate; Russian cash wheat market firm.

• Chicago futures are mixed at midday following a failed morning rally in soyoil/corn, the biofuel crops. Wheat values are holding steadier on rumours that Russia may limit wheat exports to 1.6 million mt per month starting in January on a quota. No confirmation is offered, but this would drop 2021/22 Russian wheat exports below 30 million mt by our calculation. Therefore, wheat is holding when compared to the remainder of Chicago trade. Russian legislation allows for the tax and quotas should Russian wheat stocks/supplies be deemed as too limited. Details are awaited but the quota is another restriction on Russian grain trade.

• Reuters reported that EPA was mulling cuts in biofuel blending in a win for the US oil industry. We would note that the win for big oil is primarily based on sharply reduced prices of RINs and that compliance bars will be set lower. Note that with the 2020 year completed, and just 1 quarter left in 2021, such that the lower blending requirement will not have a noticeable impact on US ethanol or biodiesel demand. Reuters indicates that the EPA 2020 blending mandate will be set at 17.1 billion gallons with 2021 at 18.6 billion gallons. Both are lowered to account for reduced fuel demand due to the pandemic.

• Importantly, the biofuel mandate for calendar year 2022 was raised to 20.8 billion gallons. It is the 2022 mandate which is most important to US vegoil/soyoil demand/prices amid the growing demand for renewable diesel. Renewable diesel is not part of the EPA mandate program and to keep it near 21 billion gallons is longer term bullish to soyoil. OMB are said to be reviewing the EPA proposals with a final mandate announcement due later this month or in October. Just getting the industry to better understand the 2022 mandate is important along with getting rid of the headline risk that has plagued the US biofuel industry since 2019, the last time it was finalised. Chicago soyoil and corn futures have been raked over by headlines of reduced biodiesel blending for months, getting the mandate behind the market is considered a relief to traders.

• Weekly US ethanol production was 272 million gallons, down 3 million from last week, but up 2% from last year. US ethanol stocks roses million gallons to 845 million gallons while Americans consumed 8.9 million barrels of gasoline per day. This gas consumption rate was up 4% from last year, but down 5% from 2019. US ethanol production is expected to eclipse 2020/21 by at least 4% which will produce a corn use estimate of 5,250 million bu or more. American gasoline consumption is expected to hold 2% below 2020 into early next year.

• The forecast is wetter across the Plains and N Minnesota, compared to the overnight run. The GFS weather forecast has added rain for late September and early October which would be ideal for germinating Kansas wheat. The EU model also hinted at increasing showers for the Plains. Otherwise, the Midwest/Delta forecast is little changed with showers continuing across the E Midwest heading into the weekend.

• It is difficult to find European wheat or Ukraine corn offer in each’s FOB/CIF markets. The tightening of non-US supplies is being felt. Yet, as the US Gulf slowly comes back to into operation, weekly export sales will be low Thursday morning. And US corn/soybean loadings will be dull for another few weeks. Thankfully, Chicago is looking beyond the macro financial conditions of China’s Evergrande today, but the company will report Thursday if they have paid/missed a US$ denominated bond debt payment. We maintain a bullish outlook on wheat, corn and soyoil with soymeal to struggle on rallies. The 50-day moving average crosses at $5.435 December corn and $7.045 in KC December wheat. Funds are vulnerably short of Chicago wheat.

• HEADLINES: China buys a few cargoes of US soybeans; Traders to monitor overnight Chinese equity markets; No US wheat offers to Morocco.

• Mixed Chicago futures in rather average volume. An early round of Chicago selling was absorbed by end user buying, while US farmers are focussed on harvest. The soy complex paced the recovery on Chinese demand. China is rumoured to have purchased 3-5 cargoes of US soybeans for November off the Gulf this morning with additional orders working. Chinese crushers are using weakening Chicago values to boost their forward coverage. Wheat futures are weaker on liquidation and Friday’s weekly drop in the Russian export tax rate. Corn appears to be caught in between soybeans/wheat awaiting yield results.

• China has purchased a known 10.3 million mt of US soybeans to date with an estimated 4.0 million hidden in the unknown category. We estimate that China will import 34-35 million mt of US soybeans in 2021/22, so their unfilled demand is pegged at 20-21 million mt. China is close bought and Hurricane Ida and the resulting 3–4-week Gulf export slowdown made matters worse. China has an immediate need for US soybeans and their return from their autumn holiday should produce a point of support. US weekly soybean exports should really ramp up in October to a point where the US is shipping 75-85 million bu/week. This demand will firm cash basis.

• There are few resting orders above Chicago with end users able to scale into purchases on the early break. The overnight price action in Chinese equities will drive raw material (Chicago) prices on Wednesday. China will return from their holiday and there is hope that Chinese equities will not melt down very much due to Evergrande. A weaker Chinese stock market is expected with the US equity recovery helping to blunt any bearish reaction. Traders are waiting for China’s stock market reaction before taking a more bullish grain/soy stance.

• Chicago brokers estimate that funds have sold 5,100 contracts of wheat and 7,600 contracts of corn, while buying 1,900 contracts of soybeans. In the products, funds have sold a net 2,200 contracts of soyoil and 1,400 contracts of soymeal. Funds are building a larger net short soymeal position.

• The industry is questioning the sharp rise in IL crop ratings when producer yield reports do not suggest improvement. And the Illinois corn and soybean crop is mature or nearly so, which makes such sizeable condition gains even more difficult to understand. Illinois crop ratings have been volatile all summer. The 2020 Illinois corn yield was 192 bushels/acre with NASS pegging the 2021 yield at a record 214 million bu (up 22 bushels/acre). Harvest data argues for an IL corn yield near or slightly above 200 bushels/acre. Yield trends in nearby Indiana and Ohio are similar. Harvest data will be watched, but the yield trend is down for later seeded corn. Soybean yield trends will be better defined by the weekend.

• There were no offers of US SRW wheat to Morocco on a reduced import quota. The tender went unfilled.

• The forecast is wetter across the Delta and through the SE US Plains. The GFS weather forecast has added rain for late September to this area. Other forecasting models are not as wet, and questions about the correctness of this rain are noted. The EU model will need to confirm the change in E Plains and Delta rain with the jet stream being pulled southward.

• US corn/soybean yield reports maintain their importance to Chicago price. Disappointing yield trends are noted in the E Midwest with N Plains/W Midwest yields down as they were impacted by drought. E Midwest corn yields has one wondering if the 2021 US corn yield can surpass last year’s 172 bushels/acre.

• However, before adding long Chicago positions, traders want to be comfortable that China’s equity market does not fall too far tonight following their 4-day weekend. Evergrande’s debt has not been restructured and some additional messiness in world financial markets is expected. And key to nearby price direction will be US export demand and how shipments ramp up in October. Chicago bulls need to see larger weekly US corn/soybean exports in October.

• HEADLINES: Low volume Chicago morning with all eyes on China’s Evergrande for economic contagion; China August trade data calls for 101 million mt in 2020/21.

• It is an Evergrande (China’s second largest property developer by sales value) and a macro-Monday. Chicago futures are trading weaker at midday with soybeans/soy products showing the biggest losses tied to the uncertain viability of China’s Evergrande, with estimated loan/interest rate payments amounting to $669 million by the end of the year. Corn and wheat futures are following, but the losses are being limited by strong world cash markets.

• The initial Evergrande bond interest rate payment was to be made today with a larger tranche due Thursday. Evergrande has already told banks not to expect payment today, but it is far less certain what will happen Thursday. China injected liquidity into its banking system on Friday/Saturday to prevent any financial contagion. And China is on their Autumn Festival which concludes Tuesday. Although the financial struggles of Evergrande are sizeable (estimating holdings in real estate equal 2% of China GDP), we doubt that it represents a threat to China’s banking system. This is key since China should be able to control the financial damage beyond Evergrande. Yet, amid all the uncertainty, a host of world asset prices are lower awaiting fresh news.

• Chicago brokers estimate that funds have sold 4,300 contracts of wheat, 6,000 contracts of corn, and 7,400 contracts of soybeans. In soy products, funds have sold 3,400 contracts of soyoil and 2,100 contracts of soymeal. It has all been on the sell side from funds with end users buying the early break.

• US weekly exports for the week ending September 16 were 15.9 million bu of corn, 10.1 million bu of soybeans, and 20.7 million bu of wheat. The export inspections were above trade estimates with more than half of the Gulf just getting back to operation. Slowly and surely, the impact from Hurricane Ida will wane in coming weeks as Gulf CIF/FOB and barge trade returns to normal.

• Chinese August trade data indicates that the USDA is still too low by 2 million mt in soybeans and as much as 3-4 million mt on corn imports for the 2020/21 international crop year that ends on October 1. We estimate that China will import 101 million mt of soybeans and 29-30 million mt of corn in 2020/21, both are record large and reflect that China’s feed/soybean import demand is record large.

• Soybean cutting started on the weekend which followed corn with disappointing yield results. Early soybean yield data is running 2-6 bushels/acre below field checks and producer expectations. Disease pressures are also noted, but it is too early to confirm a yield trend. Many more E Midwest producers will switch over to cutting soybeans later this week and allow their corn to dry down. Propane costs are through the roof which is causing more Midwest farmers to await drying corn, even amid poor corn stalk quality.

• The forecast is dry across the Plains and the W Midwest with limited rainfall for the next 10-12 days. Warm temperatures and the dry weather conditions should promote active harvest progress. Expansive high-pressure ridging holds across the West Central US which maintains a warm/dry upper air flow. The E Midwest will see showers/storms in the coming days which will slow the harvest. Harvest rolls along smoothly well into the first week of October. Maximum highs temperatures range from the mid 70′s to the lower 90′s. We note that La Niña is coming on strong and much be carefully watched during the 2021/22 S American growing season.

• First it was Hurricane Ida and now it’s China’s Evergrande Property Group that are masking bullish Chicago grain/soy fundamentals. Next week’s Sept Stocks report for corn/wheat should confirm tightening US supplies. China will be back from holiday late Tuesday (US time) with new buying for US soybeans. A turnaround Tuesday is expected following steady/1% decline in NASS corn/soy condition ratings this afternoon. Russian wheat export taxes will keep rising with farmers holding stored supply. Our view stays bullish of Chicago corn, wheat, and soybeans. Key support for November beans rests at $12.50-12.60.

• HEADLINES: Chicago corn/wheat hold chart-based support, Soybeans stumble on fresh soyoil low; China on holiday for their moon festival next week.

• Chicago futures are lower at midday with corn/wheat futures trying to grab back some of the morning losses. Hedge and speculative sales were noted heading into the first real harvest weekend of the season. December corn and November soybeans returned to test chart-based support which lies under $5.20 and $12.75, respectively. Wheat futures followed on profit taking, but world cash prices did not budge. The world wheat market continues to add premium for tightening supplies of world protein wheat.

• FAS announced that China booked 132,000 mt of US soybeans today. US exporters report that China continues to book US soybeans out of the Gulf and PWN for November realising that elevation space is getting tight on a massive export program. Midwest cash basis will break on the shift from old to new crop supplies, but a basis low should be set in the first third of the harvest. There is plenty of bin space available to tuck the 2021 crop away. China crush margins beyond the next 30 days are deeply positive and China is extremely short bought on nearby needs. Cash sorghum traders advise that China has become interested/active in securing US December-March sorghum.

• China will be on holiday Monday/Tuesday for their Moon Festival. We hear that China is asking Ukraine to pull their corn purchases forward for October export. This may allow China to roll their US corn export slots to soybeans (which China desperately needs). The 12 million mt of known/unknown US corn purchase was to ship by the end of February. Now because of Hurricane Ida and the damage on the Gulf, the completion of those exports could be pushed backwards to March. It is soybeans that China needs for spot or nearby shipment.

• The US$ has rallied early today which sparked speculative Chicago selling. Fund managers continue to closely link the value of the greenback to a host of raw material values. The US$ is back trading at its best level since late August as the Delta Covid variant does not appear to be having a negative impact on the US economy. Will the Fed taper bond purchases by late year.

• Chicago traders estimate that managed money has sold 3,100 contracts of wheat, 5,200 contracts of corn, and 5,900 contracts of soybeans. In soy products, funds have sold 1,000 contracts of soymeal and 4,300 contracts of soyoil.

• Some cash corn is moving in the E Midwest the best sellers being in Indiana and Ohio. The movement is not heavy and cash basis bids are holding steady. We expect that producers will really get at the corn/soybean harvest next week. Producers will deliver against their forward contracts, but with seed moisture falling at least .5% each day and the Midwest weather forecast being open, the 2021 harvest will likely be one of the fastest in recent memory.

• The midday GFS weather forecast is drier than the overnight for much of the Midwest. Expansive high pressure ridging meanders into the heart of the Midwest on the weekend which cuts off precipitation entirely from the Central US. Cooler but still very dry conditions are projected in the 6–10-day period. Harvest rolls along smoothly well into the first week of October. Maximum highs temperatures will range from the 80s and low 90s.

• End users are poorly covered and US corn yield is disappointing on late summer disease pressures (premature death of the plant). The premature death lowers corn test weight. By the end of next week, some 25-30% of the US corn crop will be harvested and a lower yield assumption will be set for the October NASS report. The lower yield raises the importance of the September Stocks report on the 30th . Tightening world protein wheat stocks, the lower corn yield and strengthening US soybean demand from China does not argue for a lasting downtrend. Corn, wheat and soyoil are the best values on any further Chicago break.