- Mixed and low volume trade best defines Chicago trading at midday. The summer row crops have witnessed early fund selling with corn in the downside lead, while wheat values rise on the potential for Southern Hemisphere crop losses due to adverse weather. Position squaring is featured with directional trends lacking. We look for a mixed Chicago close with traders holding off on taking new risk prior to Monday’s USDA September Stocks and Small Grains Final Production report.
- The USDA reported another 257,000 mt of US soybeans that were sold to China in the 2019/20 crop year. The announcements take total announced US soybean sales to China this week at just under 840,000 mt. China has total sales commitments on the books in a new crop position of 2.1 million mt, so this week’s sales take China’s known purchase total closer to 3.0 million mt.
- China has discussed allowing private crushers to secure 4-5 million mt of US soybeans on a tariff free basis. Their purchases were initially off the PNW coastline, but Chinese crushers are now including the Gulf. Private Chinese crushers are more cautious in their purchases than Sinograin (Chinese Government).
- The USDA reported that for the week ending Sept 19, China secured 391,000 mt of US soybeans with net cancellations of 32,000 mt. There are just over 4.0 million mt of US soybeans sold to an unknown buyer with most arguing that at least half of those soybeans are to Chinese buyers. This would place 2019/20 US soybean sales to China at closer to 5.0-5.5 million mt on a known/unknown basis.
- The weekly export sales report for the week ending Sept 19 were; 10.4 million bu of wheat, 19.4 million bu of corn, and 38.1 million bu of soybeans. All weekly sales totals were disappointing.
- For their crop years to date, the US has sold 462 million bu of wheat (up 63 million or 16%), 360 million bu of corn (down 359 million or 50%), and 449 million bu of soybeans (down 236 million or 34%). The start of the sales year for US corn and soybeans has been very disappointing and likely to get worse before there is a hint of any improvement. Argentine, Brazil, and Ukraine are offering their corn some $0.15-0.40/bu under the US Gulf.
- Brazilian farmers are becoming active in soybean seeding with rain projected to be on the way in the next week, they will risk seed laying in dry seedbeds for 10 days if they know that rains will arrive.
- The midday GFS weather forecast shows a few far northern spots will reach down into the mid 30′s, but there is no evidence of a crop damaging frost/freeze into October 10. Much of the Canadian grain areas will see their growing season end in early October, but key US crop areas will be spared as a ridge of high pressure over the SE US elongates and retrogrades west. This more western position of the ridge shifts the mean position of the jet stream normal. Near to above normal rainfall is expected across the C Plains and the W and N Midwest. The E Midwest will enjoy drier weather conditions. The frequent rain looks to produce isolated flooding across IA where rainfall totals could reach upwards of 4.00″.
- The export outlook for US corn, soybean and wheat is dismal. US corn export sales will be slow right into 2020 amid keen export competition. This caps rallies in spot Chicago soybeans above $9.20 and December corn above $3.85. The demand bears are regaining their footing. However, Midwest harvest yield reports are disappointing thereby keeping Chicago values supported. Rallies and breaks will fail.