• HEADLINES: Bearish 2023 HRS wheat surprise; US corn stocks below last year at 1,361 million bu; Soybean stocks 18 million bu larger than WASDE.

• Chicago ag markets are sharply lower following the USDA September 1 Stocks in All positions and final US 2023 Small Grain Production report. The surprise of the report was a larger than expected decline in final 2023 US corn stocks, and a larger than expected rise in US wheat production. US soybean stocks were slightly larger, but generally within trade expectations.

• NASS/USDA forecast 2022/23 US corn end stocks at 1,361 million bu, down 91 million bu from the September WASDE estimate and 16 million bu below the year prior stocks. We calculate the Q4 US corn feed/residual use rate at 696 million bu, down 81 million bu from last year, but far larger than had been forecast by WASDE. Fourth quarter US corn disappearance at 2.75 billion bu was 220 million bu less than the prior year due to sliding US corn export demand of 343 million bu. A year ago, the US exported 525 million bu or 181 million bu more corn. Most of the decline in Q4 US corn use was the drop in export demand. The 1,361 million bu defines 2022/23 US corn end stocks which places added importance on 2023 US corn yields. The US 2022 US corn crop was revised down 15.0 million bu on a further review with the 2022 yield pegged at 173.4 bushels/acre.

September 1 US Stocks (million bu)

            2021        2022        2023

Corn            1,234        1,377        1,361

Soybeans        257        274        268

Wheat            1,774        1,778        1,780

• NASS forecast 2022/23 US soybean end stocks at 268 million bu, up 18 million bu from the September WASDE. 2022/23 soybean stocks were down 6 million bu or 2% from last year. We calculate the Q4 US soybean residual at -125 million bu as NASS adjusted last year’s US soybean crop down 5.9 million bu with a yield of 49.6 bushels/acre. NASS adjusted 2022 US soybean harvested acres downwards to 86.17 million acres. The 2022 Q4 soybean residual last year was -123 million bu. The additional 18 million bu of 2022/23 soybean end stocks will be added in the next WASDE report. The 2022/23 US annual soybean residual is estimated the largest level since 2004.

• US wheat production data leans bearish in that NASS shocked the marketplace with a much larger spring wheat production number. Final US HRS production is pegged at 468 million bu vs. 413 million in July, and despite very weak crop ratings in August. Final HRW production is 601 million bu, vs. 585 million in July. Total US wheat production was lifted 77 million bu to 1,811 million. This compares to 1,650 million in 2022/23. Yet, KC and Minneapolis futures have been actively shedding premium in preparation of larger final yields. We doubt that 2023/24 US wheat end stocks will be raised by more than 5-15 million bu in USDA’s Oct WASDE due to larger than expected feed consumption.

• June-Aug wheat feed/residual disappearance totalled 219 million bu, up 80 million (58%) from the previous year. We expect USDA to raise annual feed/residual by 30-40 million bu. This along with better than expected export sales (relative to USDA’s forecast) keeps final US wheat end stocks at 615-625 million bu. The HRS balance sheet will loosen most compared to WASDE estimates in early September. Wheat futures have pushed to new lows on the decline with support in December Chicago wheat found under $5.50/bu.

• The midday GFS weather forecast is like the overnight run with limited Central US rainfall over the next 10 days. The best rain looks to drop across the Northern Plains and WC Texas. Midwest rains hold off until mid-next week on a frontal pass. A cool forecast is offered after October 7 with a frost likely across S Canada and the far NC Midwest.

• Red is the colour of Chicago pricing boards at midday amid bearish wheat data, a lack of bullish soy data, and as equity markets stay concerned about the rising likelihood the US government being closed on the weekend. Wheat must contend with an already opaque Black Sea market and the lack of future USDA data will leave cash traders even more in the dark. Otherwise, it is normal for spot Chicago soy to score its annual low in early October. Downside risk in corn is limited. Wheat is undervalued and oversold, with Paris milling contracts finding support at late August/mid-Sep lows. Gulf SRW this weekend will be quoted $5-6/mt below French origin. China is on holiday next week and US farmers will squirrel away their new crop harvest waiting for a Chicago rally and improvement in basis. Soyoil is the only Chicago grain that is not impacted by slowing export demand. Its bull story is rooted in demand via renewable diesel.

• HEADLINES: Month and quarter end liquidation felt this morning; USDA/NASS crop reports Friday; China rumoured to secure Ukraine corn; can you book freight; Chicago volatility ahead.

• Chicago ag markets are mixed at midsession with corn higher, soybeans lower with wheat trapped in between. Soyoil is lower as oil share spread unwinding is occurring which has pushed soymeal into the green. Yesterday was just the opposite with soyoil soaring to strong gains as soymeal sagged. Chicago has been choppy for most of the week with traders focused on the NASS Stocks/Final Small Grain Report tomorrow. The growing potential for the US Government to close on the Budget impasse while the harvest is ongoing produces liquidation on both sides of the ledger, selling of length in soybeans/soyoil and the buying in of shorts in corn. If we had to bet on the USDA report tomorrow, we suspect it will lean bullish to corn/soybeans based on strong cash basis bids.

• The week has produced fogginess regarding the Black Sea grain trade. Yesterday there was a cargo of Ukraine wheat offered by Nibulon at $239/mt ($16/mt below Romanian) but Egypt’s GASC nor others could fix freight to loadout the Ukraine wheat.   There have been 5 vessels that have passed through Ukraine’s new export corridor, but 2 were ships that were locked down when the war started in March of 2022 while others carried grain, concrete and iron ore. Ship brokers are unable to provide a cost to transit Ukraine grain while Russia keeps attacking Ukraine port infrastructure with Mykolaiv hit overnight.

• Although newswires report that China has booked a large amount of Ukraine corn for November/December, the execution of the sale will be difficult. Freight and insurance are nearly impossible to find as no one wants to become trapped in port by the war. Thus, it is not known whether a workable marine grain export corridor exists from Ukraine for ongoing commercial grain transactions. And the fear is that the Russian military keeps targeting port infrastructure.

• US weekly export sales for the week ending September 21 were 20 million bu of US wheat, 33.1 million bu of corn, and 24.7 million bu of soybeans. For their respective crop years to date, the US has sold 337 million bu of wheat (down 56 million or 14%), 495 million bu of corn (down 17 million or 3%), and 652 million bu of soybeans (down 330 million or 33%). China has booked 7 million mt of US soybeans with another 5 million mt likely held in an unknown destination category. We anticipate China taking 1,050 million bu of US soybeans in 2023/24.

• Chicago brokers estimate that managed money has sold 4,700 contracts of soybeans and 3,900 contracts of soyoil, while buying a net 900 contracts of wheat, 6,600 contracts of corn, and 3,900 contracts of soymeal. Active meal/oil spreading is noted as yesterday’s buyers are today’s sellers.

• The EU cut its wheat crop estimate to 125.3 million mt (down 700,000 mt) and its corn crop to 59.8 million mt (down 1.9 million). The smaller corn crop will mandate additional corn imports from Ukraine to make up for the losses. A year ago, their corn crop was 52.3 million mt as drought gipped much of Western Europe.

• There have been rumours that China has shifted 3-6 cargoes US soybean to Brazil and Argentina due to cheaper price offers. The rumours started that the US PWN soybeans were being switched, but this makes no economic sense. We are hearing that 3-6 cargoes of US Gulf soybeans were swapped. The export tail of S American soybeans is long as the Argentine soy/dollar program ends.

• The midday GFS weather forecast is drier across the W Midwest and wetter across the E Midwest than was offered overnight. Neither area has rain that will delay harvest for more than a few days, but the totals will help keep the dust down and prevent soybean seeds from having moisture levels less than 11%. Much cooler temperatures and frost will touch the N Plains and the Upper Midwest after October 8.

• End of month and end of quarter position squaring is ongoing with liquidation noted in soybeans/soyoil. China is out on holiday next week (Golden Week) which has sparked rumours of US soybean sales being switched to S America. US Sept 1 corn stocks could hold a bullish surprise on feed use that is not as low as 600 million bu. We see US 2022/23 US corn end stocks at 1,409 million bu and soybean stocks at 220 million bu. Funds are now short more than 100,000 contracts of Chicago wheat, a risk in our view.

• HEADLINES: Oil share back in vogue on surging energy; Wheat futures sag on GASC purchase of Romanian/Bulgarian wheat; US ethanol production up 18%.

• Chicago ag markets are mixed at midsession with aggressive price offers to GASC pressuring Chicago wheat values, while corn futures rise above chart resistance due to a surge in energy prices. Soyoil/soybean futures are following the rise in corn in expanding volume, while meal sags on expanding US crush operations.

• A close above $4.83 basis December corn futures sets a bottoming chart phase that projects an initial rally to $5.10-5.20. And seasonal lows often occur in soybeans in early October as the US harvest pushes beyond 40%.

• The bottoming of the Russian wheat market (whether by slowly rising interior bids or by the Russian Government’s hardening their stance at $270/mt (fob offer prices) is starting to round out a bottom. The difficult question remains on world demand which is soft due to the rising US dollar and high lending rates. Demand remains the key question that traders and producers are monitoring.

• Chicago brokers estimate that managed money has bought 2,900 contracts of soybeans, 3,600 contracts of soyoil, and 5,600 contracts of corn. Managed money has sold a net 1,900 contracts of soymeal and 3,100 contracts of wheat.

• Chicago price direction has been largely based on fund flows for the past several weeks, and this trend looks to persist.

• Egypt’s GASC secured 170,000 mt of Romanian and Bulgarian wheat in an overnight tender at $255/ basis fob. Russian wheat was offered at $270/mt fob which was non-competitive with Eastern European offers. Nibulon offered Ukraine wheat to GASC at $239/mt, but we are told that no one would offer freight to move the grain. Although rumours persist that grain is trading out of Ukraine ports, the unfortunate truth is that few shipowners are willing to take the marine transit risk. And we are doubtful that the Russian Government has entered or negotiated a 1.0 million mt wheat sale to Egypt. The Egyptian Government is short of wheat and has need to expand imports from late October into early 2024.

• US energy prices are surging as deliverable US crude oil stocks continue to decline at Cushing, OK, which is related to strong demand. US crude stocks fell 2.2 million barrels to 416.3 million while Cushing stocks fell by 943,000 barrels to just 22 million barrels, the lowest since July 2022. US WTI crude oil futures rose by $3.50 to just over $94.00. The rise in US and world energy prices is making biofuel fuel production more profitable.

• US weekly ethanol production amounted to 297 million gallons, or up 18% from last year. US ethanol stocks rose to 926 million gallons, 3% below last year. US ethanol margins are holding at their best levels in a decade.

• The midday GFS weather forecast is wetter across the Central and Eastern Midwest forecast in the week 2 period. Showers will dot IN and OH prior to the weekend with totals of 0.4-1.00”. Thereafter, a 6–7-day period of warm/dry weather occurs before the overall NC US weather pattern turns cooler/wetter with a low-pressure trough settles southward. Confidence in this cooler/wetter forecast is increasing. High temperatures are advertised in the 80s and 90s across the S Plains and the Delta for the next week with 70s and 80s elsewhere. Rapid Midwest harvesting is anticipated, but the need for a rejuvenation of river levels is growing. The wetter 10–15-day forecast offers hope for improved stream flows across the Central and Eastern US.

• It is all about Friday’s NASS Stocks and Final Grains report. Although Ukraine is offering cheap grain at several ports, vessel owners must be willing to take the risk. Traders are trying to measure the amount of grain which will leave Ukraine, our early assessment is that it will be 40-50% less than last year’s pace. Soyoil is the bullish ag commodity on demand. The availability of an October USDA Crop Report depends on whether the US Government closes due to the 2024 budget impasse.

• HEADLINES: Chicago dull, choppy at midday; US dollar scores new rally high.

• Chicago ag markets continue to do very little ahead of the release of NASS stocks data. Final US wheat, barley and oat production will also be published as well as a revision to final 2022 US soy production. The market is aware that feed/residual is difficult or nearly impossible to measure on a quarterly basis, and so surprises are possible. We note the USDA’s call that US corn feed/residual collapsed in the Jun-Aug period. We doubt corn data leans bearish on Friday.

• Adverse weather battling risk-off in macro markets best defines the morning session. The US dollar index at midday has scored a newer 9-month high, with currencies in Russia, Brazil, and Australia weaker by varying degrees. The Dow is down 270 points and has lost 2.4% so far in September. Macro weight and the lull of the global crop calendar, US weather is becoming irrelevant, S American weather’s importance increases in October, continue to limit market participation. Breaking news today is absent. Milling wheat and corn futures in Paris are flat.

• Yet, traders must be mindful of ongoing weather abnormalities. We note that rainfall in E Australia next week is projected to be more scattered in nature. There is no indication that a pattern shift to wetter weather occurs in eastern Ukraine and Southern/Central Russia prior to Oct 6. Drought in Argentina worsens over the next 10 days, with first-crop corn and soy planting typically beginning in October. Weather patterns become a bigger deal beyond the next 1-2 weeks.

• Soyoil futures have recovered as WTI crude stays resilient at/above $90 per barrel. Weekly EIA data on Wednesday morning is expected to show crude and motor gasoline stocks steady to slightly lower week on week. Energy supplies are not abundant. Ethanol production margins remain massively profitable. Renewable diesel margins have improved since mid-Sep on soy oil’s break.

• Board crush margins at $2.00+/bu and crush margins in the cash market at $3.00+ since July are working to maintain a sizeable expansion in US crush capacity, which is a big deal in the long run, and places even more important on yield performance in S America this winter.

• The midday GFS weather forecast is wetter across the Upper Midwest in the 11–15-day period, with rainfall totals of 2-4” forecast Oct 8-10 in IA, MN and WI. However, confidence in forecast details is low. Otherwise, light/moderate showers will linger in the eastern Midwest into Thursday. Dryness and abnormal warmth then blanket the whole of the Central US during the opening week of October, with high temperatures advertised in the 80s and 90s across the S and C Plains. Highs are projected to reach the 70s and 80s elsewhere. Rapid harvesting is anticipated, but the need for a rejuvenation of river levels is growing. A wet late autumn/winter is hoped for.

• Both the bulls and bears are struggling for leverage. We are increasingly recommending sourcing supply coverage on weakness. Positive seasonal trends are known. Ongoing S American weather adversity or the loss of just 0.5 bushels/acre of US soy yield mandate the addition of premium.

• HEADLINES: Chicago mixed in thin volume; Funds shed length in soyoil; S American weather forecast too dry.

• Chicago ag markets are mixed but little changed in thin volume. It is clear few want to add to existing positions or boost participation ahead of key NASS data on Friday. A clearer row crop yield trend will also be known in the next 10 days, and today there is just nothing for fund managers to sink their teeth in. Our belief is that a bullish final 2022/23 US corn stocks surprise is possible and as USDA’s annual corn feed/residual number implies a dramatic contraction in disappearance in the Jun-Aug period. Otherwise, low volume/choppy trade is anticipated into Friday morning. US dollar strength has capped new buying. Attacks in the Black Sea from both Ukraine and Russia are intensifying, but interior Russian wheat markets have shed premium on large current stock levels.

• We would note that typical Chicago soy seasonals imply a market bottom in the first half of October, a bit after corn, and importantly crush margins have held up well in recent week. The spot futures-based margin on Monday sits at $2.18/bu, vs. $2.20-2.25 last week. Margins are better yet in the cash market, and crush capacity expansion will be a feature of the N American soy/oilseed markets into 2025.

• We believe today’s sharp correction in nearby soyoil is short sighted, and in the long run we are unsure show US soy supply and demand will be balanced if national yield is trimmed even slightly. A US soy yield in USDA’s Oct WASDE below 50.0 bushels/acre is bullish of cash prices into spring 2024. USDA will be reluctant to raise its 2023/24 US soy consumption forecast as end stocks of 200-220 million bu reflect pipeline minimum stocks. Rather the market must sort out how much export demand is deferred or eliminated altogether.

• US export inspection in the week ending Sep 21 included 26 million bu of corn, vs. 27 million the previous week, 18 million bu of soybeans, vs. 16 million the previous week, and 17 million bu of wheat, vs. 16 million the prior week. In the respective crop years to date, exporters have inspected 77 million bu of corn, 16% above last year, 47 million bu of soybeans, up 6%, and 206 million bu of wheat, down 28% from mid-Sep 2022.

• Other breaking news is lacking. Into the middle or latter part of autumn we expect the replenishment of physical supplies across the Northern Hemisphere to battle worrisome global climate patterns. Changes in patterns are not indicated in Argentina, Northern Brazil, Australia or much of the Black Sea region in the next 10 days. The midday GFS weather forecast keeps rainfall in Mato Grosso do Sul, Mato Grosso, Goias and Bahia confined to very light/scattered amounts, which does nothing for soil moisture amid abnormal heat. Rainfall in E Australia has been pushed into the 11–15-day period. Developing dryness in E Ukraine/S Russia needs closer monitoring in October.

• History shows that autumn precipitation/soil moisture in Russia has a noticeable impact on yield potential the following spring.

• The GFS weather forecast in the US is wetter across the Southern Plains HRW Belt Oct 2-5, with accumulation in the TX, OK panhandles and SE CO pegged at 1-3+”. A few showers disrupt harvest efforts across the NW Corn Belt & IL/IN in the next 48 hours, but major delays are absent. Abnormal warmth will be featured Central US-wide into Oct 10. Frost/freeze dates across the N Plains/Upper Midwest will be much later than normal.

• Chicago markets are adrift awaiting final clarity on US production/supply. Abnormal S American weather is not yet directly impacting productivity, but weather in Brazil especially becomes more important in the next 10 days. Normally some 40-70% of soybeans in Mato Grosso are planted in the first three weeks of October. Rain is needed. Mexico this morning purchased 41 million bu of US corn from 2023/24 delivery, and US corn on a fob basis is competitive with Brazilian origin.

• HEADLINES: Chicago steady/higher in thin volume; Soyoil paces recovery; Midday weather forecasts unchanged.

• Grain and soy futures in Chicago are steady to higher with soyoil pacing the recovery due to growing renewable diesel (RD) demand with end users taking coverage into Q1 2024. The recent soyoil price break raised RD margins with crude oil/petroleum diesel prices rising to yearly highs. The onboarding of new RD plants and rise in the industry operating capacity will be a drain on North American soyoil supplies. The demand pull on RD feedstocks will be sizeable until new US soy crush facilities start to come online.

• US soy crush capacity will increase sharply in 2023/24 and 2024/25 from existing USDA forecasts. It is the coming RD demand and the need for an additional 5 million acres of soybeans that underpins the complex. The soy/corn ratio will need to push out to 3:1 to encourage farmers to seed 88.5 million acres of soybeans and cut corn acres to 90 million or less. The rapidly expanding US soy crush rate places added importance on the coming S American harvest as US soybean exports must be reduced. We look for a higher close in the complex with the grains to follow. Late day hedge pressure will be modest amid the wet weather forecast for the N Plains and the W Midwest. With rains of 0.4-2.50” it will take a few days before farmers are able to get back into their fields. The US soybean harvest will be 9-11% and corn 18-21% finished through Sunday.

• Chicago brokers report that money managers have bought 3,400 contracts of corn, 2,900 contracts of wheat, and 3,400 contracts of soybeans. In the products, funds have sold 1,900 contracts of soymeal and bought 4,300 contracts of soyoil.

• Early yield data continues to point to US corn and soybean yields below last year. There is considerable variability in yields depending on if a corn field received a mid-June rain or a soybean field a late August rain. Fields that received or missed those rains are seeing the yield variance. Next week the soybean harvest will gather additional pace which should help define how far below last year’s yield (49.5 bushels/acre) the yield really is. We peg the US 2023 soybean yield at 49.0 bushels/acre, but actual field data will produce help in defining whether a deeper cut is needed.

• A week from today, NASS will update final 2022/23 US corn, soybean, and sorghum stocks along with the final small grains report. This report often provides some surprises. Our bet is based on strong cash premiums that lasted into early September is that US corn/soybean stocks are slightly smaller than forecast. Additionally, USDA’s annual 2022/23 corn balance sheet implies a major correction in Jun-Aug feed disappearance. Old crop carryover stocks are still important in defining 2023/24 supply availability. And based on HRS yields that were disappointing, a modest cut in US 2023 all wheat production is forecast, recall spring wheat crops in MT, ND and SD on Aug 27 were rated at just 32-35% good/excellent.

• The GFS midday weather forecast is slightly wetter in the eastern Dakotas but is otherwise consistent with the morning run. Another few days of active shower activity continues across the N Plains and Upper Midwest, with additional accumulation of 1-4” advertised in SD, ND, MN and WI. A drier and still-warm pattern emerges beyond early next week. Harvest will go largely unobstructed east of the Mississippi River into the first week of October. Summer-like temperatures occur across the S Plains and S/W Midwest. Frost/freeze threats are absent.

• Weighty chart patterns and the arrival of new N Hemisphere crops have pressured values since mid-September. The replenishment of supply will be digested by early October, and thereafter focus shifts to S Hemisphere weather and whether another year of record Brazilian output occurs. The late arrival of monsoonal rains there is a concern.

• HEADLINES: Speculative selling overwhelms Chicago; Soybeans fall back to early August lows; Wheat tests September crop report low; Negative mentality deepens following US Central bank hawkishness.

• Grain futures are sharply lower in Chicago as bearish demand fears grip commodities amid the US Central Bank’s hawkish talk against inflation. End users are booking their cash needs on Chicago breaks, but money managers are in long liquidation mode in soybeans/soymeal and soyoil. Liquidation of stale long soy positions has pulled November soybean futures back against key support at $12.80-13.00. This support price was carved out in early August before weeks of hot/dry Central US weather occurred.

• Soyoil briefly rallied on oil share spreading but unlike recent days, the volume of Chicago soyoil trade is massive with over 70,000 contracts of December soyoil futures changing hands. October soyoil futures has nearly retraced 50% of the summer rally at $59.20. There may be another 1 cent down in soyoil futures, but due to tight US stocks (we believe in the NOPA soyoil stocks data as members reported correctly) and growing US renewable diesel demand, it is time again to be looking at a longer term buy in soyoil futures.

• Speculators are already short of corn and wheat, but few want to chase a rally until they see improved US export demand, or the market can confirm lower US corn yield trends. The US soybean harvest is estimated to be just 8-9% complete as of today, and additional yield data is needed to confirm the early disappointing yield trends. Additional harvest is needed.

• Chicago brokers report that money managers have sold 6,500 contracts of soybeans, 3,900 contracts of soyoil, and 4,400 contracts of soymeal. In the grains, funds have sold a net 4,600 contracts of wheat and 6,900 contracts of corn. It is a risk off day as fund managers reduce market exposure. The US DOW has fallen for the third consecutive day as US Treasury yields reach multiyear highs. The yield on the 10-year note has reached 4.5% on the fall in US jobless claims this morning to the lowest levels in decades.

• US weekly export sales for the week ending September 14 were 11.3 million bu of wheat, 22.4 million bu of corn, and 16.0 million bu of soybeans. Such sales were disappointing and reflecting that Brazil is (still) cutting into US export opportunities. We note that Brazilian fob corn basis had risen to levels that equal the US which now makes the Gulf competitive.

• For their respective crop years to date, the US has sold 317 million bu of wheat (down 65 million or 17%), 462 million bu of corn (down 30 million or 6%), and 627.5 million bu of soybeans (down 318 million or 33%). Last year the US was an active seller of new crop beans amid Brazil’s drought reduced crop. It is far too early to make any new assessments of future US export trends as it all hinges upon the coming size of the 2023/24 S American crops.

• The UN did not miss a chance for Chairman Guterres to meet and discuss the Grain Corridor Deal with Russian PM Lavrov in New York. The UN continues to push Russia for a deal, but doubts remain that Russia will return to the pact.

• The midday GFS weather forecast maintains an active upper air flow pattern across the Central US with rain chances starting tomorrow across IL. Showers blanket the Plains and Western Midwest on the weekend with rain totals of 0.5-1.50” Totals more than 2.00” favour the Dakotas, MN, IA, and WI through early next week. The storm pushes east into the E Midwest mid next week with a new system for the W Midwest late next week. Midwest high temperatures hold the 70’s/80’s into October.

• The heaviness of the Chicago decline can be felt today with fund managers sellers across the complex. Today’s close will be important to determine Friday’s price direction. A late day bounce would suggest oversold conditions and that the soy complex has liquidated. US soybean fundamentals are bullish, but tight 2023/24 US soybean stocks does not make much difference until disappointing US soy yield trends are confirmed or the harvest is beyond 50%. Chicago wheat is trying to hold the USDA Crop Report low at $5.70 while Paris wheat futures hold well above their late May low. We believe that soyoil/wheat futures are too cheap with rallies due into the end of 2023.

• HEADLINES: GASC wheat tender results awaited; Crowded Chicago spreads get liquidated; GFS midday weather run is drier for E Midwest.

• Chicago grain futures are higher with soybeans weaker at midday. Spread unwinding of long soy vs short grain and long oil vs short meal have been featured this morning. The long soy vs short grain was a popular spread heading into the September USDA Crop report due to late growing season dryness. The volume of trade remains curtailed due to recent choppiness and the uncertainty surrounding summer row crop yield. Midwest corn yields are variable while early soybean yields are disappointing and below last year. However, it is too early in Midwest soybean harvesting to call a yield trend. Thus, the market is lacking fresh fundamental inspiration. This allows chart patterns to have an overweight influence on price. We look for a mixed Chicago close with the market’s focus shifting over to the Sept 29 Stocks and Final Grain Report.

• The US Central Bank will announce their September FOMC meeting policy today. No change in rates is expected.

• Chicago brokers reflect that money managers have bought 2,600 contracts of Chicago wheat and 3,200 contracts of corn, while selling 2,100 contracts of soybeans. In the products, funds have sold 5,100 soyoil and bought 3,200 soymeal.

• Egypt’s GASC received offers from 17 sellers offering a combination of European and Russian wheat. The GASC tender was payment on sight for November. The cheapest offer to GASC was for Bulgarian fob wheat at $258.77/mt ex Varna with French and Romanian fob wheat offered between $264-270/mt. All Russian fob offers were at $270/mt depending on the Russian port of origination. Freight was offered at $19.68-22.56 on Russian wheat for a CIF price of 289.68-292.56. The French freight was $24/mt while the Romanian and Bulgarian freight was $16.09-18.80/mt making their landed price the cheapest.

• If GASC buys wheat it will be a combination of Bulgarian/Romanian/French. Rumours have the tender being cancelled. Egypt’s GASC swapped out 500,000 mt of Russian wheat to Bulgaria/Romania in recent days after Moscow blocked the sale due to the contract being below their established fob floor price of $270/mt as we reported a while back. We note that Moscow has been inconsistent on the $270/mt floor wheat floor price, and there are rumours it will be raised to $275/mt in October.

• The USDA announced that 120,000 mt of US soybeans was sold to China in 2023/24.

• US weekly ethanol production was up 9% on last year which produced 288 million gallons of ethanol with US ethanol stocks down 4% from last year at 910 million gallons. US gasoline consumption was up 1% on last year at 8.41 billion barrels/day. US crude oil stocks were down 3% from last year.

• The midday GFS weather forecast maintains an active upper air flow pattern across the Central US with rain chances starting tomorrow across IL. Showers blanket the Plains and Western Midwest on the weekend with rain totals of 0.5-1.50” Totals more than 2.00” totals favour the Dakotas, MN, IA, and WI through early next week. The storm pushes east into the E Midwest mid next week with a new system for the W Midwest late next week. Midwest high temperatures hold the 70’s/80’s into October.

• Chicago markets are all about managed money flow. The flow has been to exit long soyoil and oil share spreads, while modestly cover short grain positions. US farmers are being tight fisted with their newly harvested corn and putting it into storage. The Midwest soy harvest will get going in earnest next week. Cash basis bids are improving amid strong margins for US soy crushers and ethanol producers. The politics of Black Sea grain are confusing with Moscow wanting a wheat sale’s floor of $270/mt basis FOB while Ukraine argues with Eastern European neighbours. Seasonal lows are forming but these lows take time to confirm.

• HEADLINES: Corn bounces on the lack of farmer sales; Russian spring wheat quality in rapid decline; GFS midday weather forecast wetter for the Midwest.

• Chicago grain futures have been back and forth today. Fund managers were there to sell an early rally, but the US cash corn/soybean markets are starting to stabilise with basis bids firming amid the lack of cash grain movement.

• US farmers are harvesting corn, but the movement into the cash market is modest and related to prior contract sales. Producers will not sell open corn across the weighbridge and prefer to place the grain into farm storage. Note that basis levels relative to recent years are far weaker, and farmers fought with low basis offers throughout most of the 2023 crop year. Producers are not willing to sell cash corn at $0.20-0.60 under in the W Midwest or $0.05-0.25 under in the E Midwest. US farmers are hopeful that cash bids stay cheap through October to collect their revenue insurance checks. A cash rally in November would be ideal that allows US farmers to collect on both sides , 1) Revenue insurance and 2) From gains in cash basis and flat price bids. US farmers have a Government put (option) in place in corn at an average of $5.92 on upwards of 85% of their crop. The revenue price for 2023 US soybeans is $13.76 and here too, farmers are unlikely to part with cash beans below this level. As a footnote, the US 2024 wheat insurance revenue price was set at $7.34, down $0.85 or 10.5% from last year. This has US wheat farmers likely seeding fewer acres for 2024.

• Chicago brokers estimate that managed money has sold 3,200 contracts of wheat and 4,100 contracts of soybeans, while buying a net 2,900 contracts of corn. In the soy products, funds have sold 2,100 contracts of soymeal and a net 800 contracts of soyoil. Cash supplies of US soyoil are exceptionally tight with cash markets trading well above deliverable Chicago values. Renewable and traditional biodiesel margins are strong on surging energy valuations.

• The US Central Bank is holding their FOMC meeting today and Wednesday. It is expected that the US Central Bank will hold rates steady but talk up the potential for future rate hikes if US inflation returns. Surging energy prices must be monitored for cost push inflation, but the rising cost of gasoline and diesel also act like a tax further hitting demand. There are low odds that the US Central Bank will raise its lending rate in November, and it will await 2024 before making any additional rate hikes to further batter demand and push the inflation target rate down to 2.0%. Higher for longer is the theme for the US Central Bank.

• Siberian Russian producers are starting to abandon HRS wheat fields due to the ongoing wet weather and low interior prices. HRS wheat is said to be sprouting with disease pressures steadily rising with each day of showers. The forecast has a few days of dryness late this week, but the overall pattern shows a new round of wet weather on the weekend. And it is too dry in SW Russia for winter wheat seeding. Russian weather is something that grain traders need to follow.

• Results are awaited on the Algerian wheat tender, but the hope is that EU wheat is priced to compete against Russian fob offers. Recent demand from China and North Africa are offering post-harvest support to cash wheat.

• The midday GFS weather forecast maintains an active upper air flow pattern across the Central US with almost daily rain chances starting late Thursday. The midday forecast is wetter. Showers blanket the Plains and Western Midwest on Friday and the weekend with rain totals of 0.5-2.50” Totals more than 2.00” totals favour the Dakotas, MN, IA, and WI. The storm pushes east into the E Midwest early next week with rain of 0.25-1.25”. A few dry/warm days close out September with a new hurricane forecast for Cuba.

• Chicago is searching for a seasonal low as traders try to understand corn/soy yield trends. Small soy seed size is dropping actual Midwest soybean yields from producer expectations (and last year). We look for short covering into the Sept 29 NASS Stocks and Final Small Grain Report.  With managed money short, it is the farmer that must sell cash grain to generate new Chicago selling. Don’t sell Chicago breaks!

• HEADLINES: Chicago extends overnight losses; Speedy harvest due in E Midwest.

• Global ag markets are weaker at midday. US and world grain futures are digesting the increasing movement of Ukrainian origin grains into Black Sea. There is also fear that France may miss out on Tuesday’s Algerian wheat tender amid talk that Russian fob wheat is buyable sub-$250. Russia’s interior cash market has fallen slightly from late June’s high and export margins are high despite a rising export tax. To the best of our knowledge, Russia’s minimum fob floor price for public tenders remains $260/mt, and so the result of Algeria’s wheat purchase this week is important. The EU grains market continues its probe for demand, and this has been a weight on US markets. Chicago soybeans are subject to pre-harvest supply pressure. Nov is targeting its 100-day moving average at $13.04, though we strongly doubt sub-$13.00 can be sustained for any length of time. Soy supply rationing is ultimately needed, and the cash market in the long run is a bull.

• Weekly export inspections in the week ending Sep 14 included 25 million bu of corn, unchanged from the previous week, 14 million bu of soybeans, also unchanged, and 14 million bu of wheat, vs. 15 million the previous week.

• For their respective crop years to date, the US has exported 50 million bu of corn, up 10% from last year, 28 million bu of soybeans, down 16%, and 188 million bu of wheat, down 29%. Weekly export disappearance is tepid amid record Brazilian corn loadings and as ship line-up data continues to feature decent soy tonnages. Combined US corn, wheat and soy inspections in the week ending Sep 14 were down 1 million bu from the same week a year ago.

• El Niño has become structural in nature as a moderate/strong event, which won’t reach its peak until December. Work suggests that only now is El Niño beginning to directly impact climate patterns. This bodes poorly for any meaningful pattern shift in Australia prior to mid/late October, and as mentioned this morning Brazilian weather will be watched more closely as October approaches. Zero rain is offered to Aussie growing areas over the next two weeks. Odds of extreme heat expanding into E Australia are rising. Assuming near-term forecasts, verify, cumulative rain in Mato Grosso Brazil in September will total only 0.80”, vs. 1.75” on average. Brazilian seeding dates are often debated in late Sep/early Oct, but our concern is that long-range Brazilian climate outlooks for month have called for a pattern of below normal precipitation in major producing areas during S America’s summer. The midday GFS weather forecast has extended dryness across Mato Grosso, Goias, Minas Gerais & Bahia into Oct 3.

• Spot crude is up $0.40 at $91.20/barrel. The Dow is up 100 points. The US dollar index has corrected from morning strength and was unable to find buying above last week’s high.

• The midday GFS weather forecast is consistent. Active showers blanket the Plains and western Midwest Fri-Sun as a slowing moving frontal system works across the spine of the Central US. Totals in excess of 2” will favour the Dakotas, MN, IA and WI, where it’s most needed to replenish moisture reserves. Warmth and dryness resumes beginning Mon/Tues, and beyond this weekend major disruptions to harvest efforts are unlikely. A yield trend should be known by the first week of October.

• Ukrainian stocks of corn and wheat are large, but whether sustained maritime shipments develop is highly uncertain. Otherwise, this is the wrong time of year to be bearish of ag markets. Abnormal heat/dryness in Brazil becomes more important if it continues beyond the next 10 days.