- Quiet and firm trade unfolded on Thursday, with fund short covering continuing to offer support ahead of the USDA report. Funds bought 4,000 soybean futures on Thursday. The weekly US Export Sales report showed that soymeal exports for last week were at a ten week high of 278,000 mt. Cumulative exports for the year are now 20% larger than a year ago and record large 11.9 million mt. The cumulative FAS total is in line with the Sep WASDE export forecast of 13 million mt. With a little over two weeks of data left to be reported, there remains 882,000 mt of sales outstanding, half of which will likely be rolled into a new crop position. In soybeans, export commitments are 16% behind last year at a three year low. The average estimate for soy stocks in Friday’s report is 400 million bu or 5 million over the Sep WASDE, with analysts looking for NASS to lower the 2017 crop size by 3 million bu. Without a China trade resolution, we hold to a view of selling rallies. Nov soybeans will likely struggle against $8.80 where we expect farm selling will be uncovered.
- Dec corn crawled to a new two-week high on fresh fund short covering. The market on Friday will of course be a function of Jun-Aug feed/residual, but we continue advise using any USDA-inspired weakness to add to forward coverage. Work suggests final 2017/18 US corn end stocks will be close to the USDA’s Sept forecast 2,002 million bu. US corn export sales for the week ending Sep 20 totalled 67 million bu, the largest weekly total since March. Total US corn export commitments rest at 719 million bu, up 60% on the year and the highest since 2007. Exports account for 30% of the USDA’s forecast, with just three weeks of the crop year having passed. Generally US export demand rises seasonally into November. The USDA’s forecast therefore appears too low based on sales to date, and relatively high wheat, barley and other origin corn prices. US Gulf corn is offered $.04/bu below Argentine. Harvest will be slowed in the NW Midwest amid cool temperatures and coming rain. Rallies are needed to pry supply from the producer following heavy selling in August. And recall that world stocks in 2018/19 of 157 million mt (vs. 194 in 2017/18) already assumes normal S American weather.
- US wheat futures ended mixed, with Chicago and KC lower and spring wheat slightly higher. EU futures ended flat for a second consecutive session. Funds have sold 8,000 futures this week, and maintain a net short position in Chicago. Sept 1 US wheat stocks are estimated at 2,400 million bu, up 140 million on last year, one of the largest totals since the late 1980s. This has kept new buying limited in the US despite rising cash prices elsewhere. We note that Russian fob is up another $2/mt, reflecting a $5/mt rally on the week. Russian wheat is no longer overly cheap relative to other origins for November and beyond. US export sales totalled 24 million bu, the largest of the crop year (so far) and 6 million above the pace needed to hit the USDA’s target. Australian soil moisture remains dire. Cumulative precipitation is down 1.5” (22%) from last year, while yield is projected higher. We wonder if Aussie production will exceed 17-18 million mt, vs. USDA’s 20. World cash markets appear to have posted a secondary bottom.