- Chicago grain futures pushed higher in early Chicago trade with soybeans holding in the red but being well off their lows. The market retreated at midmorning on rumours that US Deputy General Attorney Rosenstein was heading to the White House to be fired. The DC political uncertainty is something that the markets are watching with value of the US$ becoming key to valuations. Rosenstein will be meeting with President Trump on Thursday. The DOW sank to 200-point loss on the Rosenstein news. The US Central Bank is expected to raise interest rates on Wednesday to 2-2.25%, the highest level since April of 2008. The Fed is expected to raise rates again in December and three more times in 2019. The volume of Chicago morning trade has been modest and the market will be pensive ahead of Friday’s NASS Small Grain and September Stocks estimates. We believe that prices this week will move following Friday’s NASS report.
- Chicago brokers estimate that funds have sold 3,200 contracts of soybeans, while buying 4,600 contracts of corn and 3,100 contracts of wheat. In soy products, funds have sold 2,900 contracts of soymeal while buying 4,400 soyoil US export inspections for the week ending September 20 were; 49.7 million bu of corn, 25.5 million bu of soybeans, and 15.0 million bu of wheat. For their crop years to date, the US has shipped out 116.7 million bu of corn (vs 84 million last year a 33% gain), 85 million bu of soybeans (down 28 million or 25% loss), and 239 million bu of wheat (down 110 million Bu or down 32% from last year). The US corn export pace remains impressive, while soybean exports disappoint.
- The Argentine Ag ministry released new balance sheets on Friday. Their soybean stocks total was reduced from 8 million mt to 4 million via reduced carry-in and bigger export demand. This compares to the USDA at 15.8 million mt. The difference between the Argentine and USDA soybean balance sheets is growing. The big question is which one do you believe. Crushers within Argentina are raising their import forecast of US soybeans to 1.75 million mt (65 million bu). Argentina will continue to export its own soybeans to China at a $1.95 fob premium and import soybeans and re-export the products. The additional Argentine demand for US soybeans reflects the changing trade flows that is being produced by the $2.40/bu export price differential. The Argy soymeal exports will offer new competition for US soymeal.
- The central US GFS weather forecast is wetter/colder across the North Central Midwest, but drier across the far Western Plains. We note that some very cold air filters southward in the 11-15 day period with snows across portions of the Nebraska, S IA and WC Illinois. Our confidence in this snow is low, but its worth mentioning that under this chilly pattern, that the chance of Midwest snow is on the increase. This would be more important to soybeans, and less so to corn. A frost is likely across North Dakota late week, with 11-15 day period taking that chill across much of the NW Midwest with the sub 30 degree line as far south as S NE and S IA. A series of storm systems are evident from this weekend forward that will produce showers across the Midwest with regularity. The cool/wet weather is likely to string out harvest progress.
- Funds are (in our opinion) too short of corn amid the cool/wet Midwest weather forecast and talk of variable yields is likely to spark a recovery to $3.70-3.75 basis December. Wheat is expected to follow, with users hoping for a bearish USDA stocks report on Friday to make new purchases. Soybeans appear to be stuck in a range of $8.10-8.85 basis Nov futures.