- Chicago values are mixed at midday in low volume with soybeans firm while the grains sag on static world wheat fob values. The volume of trade is lacklustre as few traders want to extend their risk heading into the end of the month/quarter and next Monday’s NASS September Stocks/Final Production Report. Cash connected traders report that China was again seeking US soybeans this morning. There may have been a few cargoes sold, but the volume was less than Monday’s activity.
- FAS reported that 200,000 mt of US corn sold to Mexico for the 2019/20 crop year. It is expected that US soybean sales should be announced on Wednesday/Thursday as sellers have 48 hours to report a sale of over 100,000 mt.
- We look for a firm close with a frost/freeze risk being talked for the N Plains and NW Midwest October 4-5 and the US/China resuming talks in coming weeks. Short covering is expected heading into the end of the week.
- Chicago brokers offer that funds have sold 2,400 contracts of Chicago wheat. Otherwise, funds have been buyers of 2,400 contracts of corn, 3,600 contracts of soybeans, and 2,500 contracts of soymeal. Funds are net sellers of 1,200 contracts of soyoil with unwinding of the oil/ meal spreads .
- US President Trump criticised China trade practices in a UN Speech and that the US will not take a “bad deal”. President Trump appears to be drawing the line on the acceptance of the May accord that was redlined by China. The trade divide between the US and China remains wide, but China is securing US farm goods for the delay in new US tariffs. The US and China will get back to the negotiating table before the onset of additional tariffs on October 15. It will be interesting to see how China will deal with the pressure of new tariffs right after the DC meetings.
- China reported this mornong that it will continue to purchase a certain amount of US farm products including soybeans and pork . This is the first time China openly discussed the purchase of US pork which has rallied CME hog futures. No tonnage totals are available, but most grain traders expect that China is in the process of securing 4-5 million mt of US soybeans for shipment through January .
- Minn December wheat futures has rallied to its highest price since July as concern for crop quality amid the latent harvest. NASS will estimate US HRW and durum production as of Sept 1 on Monday. Research indicates that Minn wheat futures are near a managed money short covering top.
- The midday GFS weather forecast remains wet across; IA, WI, MO, and IL with1.5-3.00″ of rain. The forecast stays drier across the Eastern and SE US as a ridge of high pressure holds across the SE US with Gulf moisture being pumped northward. Frequent rain chances follow. Unlike the overnight run, the midday GFS compresses the ridge southward allowing for frosty temperatures across the NCUS with lows in the low 30′s. This is warmer than the overnight model run. The cold then hangs around into October 8 limiting field drying and slowing crop maturation.
- Stability of world wheat prices is not a surprise anymore and Chicago is starting to shift its focus to N America and S American weather. In October, it is the speed of the Central US harvest and the speed of planting in Brazil/ Argentina that will key Chicago prices. The 2019 US harvest is likely to be one of the slowest in decades, and snow potential will be a topic of trade discussion in late October. We are anticipating a bounce into Friday.