- Confirmed fresh Chinese demand for US corn and soybeans pushed Chicago futures higher while traders await news on whether Egypt will pay higher prices to secure November Black Sea wheat. The corn market has lagged the wheat/soybean rally on better than expected yield reports while the large long position held by fund managers produces a limited ability to push Chicago soy futures sharply higher. November soybean futures are trading at a 1.5 cent premium to March which has Midwest farmers selling newly harvested crop on any Chicago rally.
- We look for a mixed Chicago close. If a grain closes lower, it will be corn amid the looming massive harvest and slowing non-Chinese import demand. Midday trade volume is slowing as traders await fresh world weather input for S America and the Black Sea.
- Chicago brokers estimate that funds have bought 8,300 contracts of soybeans, 6,500 contracts of corn and 3,700 contacts of wheat. In soy products, funds have bought 4,300 contracts of soymeal and 2,300 contracts of soyoil. The meal market will gain on soyoil with any S American weather soy seeding issue.
- FAS confirmed the sale of 266,000 mt of soybeans to an unknown buyer and another 264,000 mt to China. In corn, China booked 140,000 mt of US corn with another 320,000 mt sold to an unknown buyer. The combined sales amount to 530,000 mt of US soybeans and 460,000 mt of US corn for a total of nearly 1 million mt of summer row crops. China’s purchase pace shows no sign of abating with Monday’s decline providing another pricing opportunity.
- The lowest offer for wheat to Egypt’s GASC was Russia at $242/mt basis FOB with freight costs increasing the landed price to $257.50-259/mt, some $10/mt higher than last week’s purchase of Polish/Russian wheat for 235,000 mt. This is the third GASC tender during September as it tries to fill its wheat import need heading into year end. Traders await the results to see if GASC is willing to chase world wheat prices and book supply.
- China is securing/pricing late November/December US soybean cargoes. We estimate that including known/unknown sales, that China has secured 23.5-24.5 million mt of US soybeans for 2020/21. China is estimated to import an average 8.25 million mt of soybeans from all sources/month to reach an annual import total of 99 million. China could book upwards of 26-28 million mt of US soybeans for Sept-mid January before slowing their purchase pace. China will likely take 3 million mt of Brazilian soybeans with another 900,000 mt from Argentina in the same Sept-mid January timeframe. Key will be the Brazilian 2021 crop size and US soybean export potential during July/ August. If the US exports 3-5 million mt of soybeans next June-August, the 2020/21 US soybeans to China could reach 33-36 million mt.
- The remains of tropical storm Beta will shift slowly east/north and produce showers/storms over the Gulf States. The remainder of the Central US will stay dry as the overall pattern shifts to a more zonal flow on the weekend. The southward sinking jet increases rain chances across the Lake States with cooler temperatures settling southward. A ridge of high pressure builds northward from the SW US which will return heat to California and maintain a dry weather pattern across the Central US. A broad ridge/trough pattern returns into early October which will accelerate Central US harvest operations. The trough in the Eastern US allows cooler temperatures to sink southward with below normal readings into October 5.
- Soybean futures rallied strongly and then corrected back into the red as traders understand that China’s State buyer Sinograin is nearing an end of their reserve purchase program. However, Chinese crushers have needs to cover into early 2021 and will be be buyers on breaks (just not daily as Sino has since late August). Corn lacks Gulf loadout availability into January while the wheat market is all about Black Sea rain. A new Black Sea wheat crop needs to see rain fall prior to the middle of October. Chicago futures appear to becoming more sensitive to US/World financial markets.