- HEADLINES: Oil share back in vogue on surging energy; Wheat futures sag on GASC purchase of Romanian/Bulgarian wheat; US ethanol production up 18%.
- Chicago ag markets are mixed at midsession with aggressive price offers to GASC pressuring Chicago wheat values, while corn futures rise above chart resistance due to a surge in energy prices. Soyoil/soybean futures are following the rise in corn in expanding volume, while meal sags on expanding US crush operations.
- A close above $4.83 basis December corn futures sets a bottoming chart phase that projects an initial rally to $5.10-5.20. And seasonal lows often occur in soybeans in early October as the US harvest pushes beyond 40%.
- The bottoming of the Russian wheat market (whether by slowly rising interior bids or by the Russian Government’s hardening their stance at $270/mt (fob offer prices) is starting to round out a bottom. The difficult question remains on world demand which is soft due to the rising US dollar and high lending rates. Demand remains the key question that traders and producers are monitoring.
- Chicago brokers estimate that managed money has bought 2,900 contracts of soybeans, 3,600 contracts of soyoil, and 5,600 contracts of corn. Managed money has sold a net 1,900 contracts of soymeal and 3,100 contracts of wheat.
- Chicago price direction has been largely based on fund flows for the past several weeks, and this trend looks to persist.
- Egypt’s GASC secured 170,000 mt of Romanian and Bulgarian wheat in an overnight tender at $255/ basis fob. Russian wheat was offered at $270/mt fob which was non-competitive with Eastern European offers. Nibulon offered Ukraine wheat to GASC at $239/mt, but we are told that no one would offer freight to move the grain. Although rumours persist that grain is trading out of Ukraine ports, the unfortunate truth is that few shipowners are willing to take the marine transit risk. And we are doubtful that the Russian Government has entered or negotiated a 1.0 million mt wheat sale to Egypt. The Egyptian Government is short of wheat and has need to expand imports from late October into early 2024.
- US energy prices are surging as deliverable US crude oil stocks continue to decline at Cushing, OK, which is related to strong demand. US crude stocks fell 2.2 million barrels to 416.3 million while Cushing stocks fell by 943,000 barrels to just 22 million barrels, the lowest since July 2022. US WTI crude oil futures rose by $3.50 to just over $94.00. The rise in US and world energy prices is making biofuel fuel production more profitable.
- US weekly ethanol production amounted to 297 million gallons, or up 18% from last year. US ethanol stocks rose to 926 million gallons, 3% below last year. US ethanol margins are holding at their best levels in a decade.
- The midday GFS weather forecast is wetter across the Central and Eastern Midwest forecast in the week 2 period. Showers will dot IN and OH prior to the weekend with totals of 0.4-1.00”. Thereafter, a 6–7-day period of warm/dry weather occurs before the overall NC US weather pattern turns cooler/wetter with a low-pressure trough settles southward. Confidence in this cooler/wetter forecast is increasing. High temperatures are advertised in the 80s and 90s across the S Plains and the Delta for the next week with 70s and 80s elsewhere. Rapid Midwest harvesting is anticipated, but the need for a rejuvenation of river levels is growing. The wetter 10–15-day forecast offers hope for improved stream flows across the Central and Eastern US.
- It is all about Friday’s NASS Stocks and Final Grains report. Although Ukraine is offering cheap grain at several ports, vessel owners must be willing to take the risk. Traders are trying to measure the amount of grain which will leave Ukraine, our early assessment is that it will be 40-50% less than last year’s pace. Soyoil is the bullish ag commodity on demand. The availability of an October USDA Crop Report depends on whether the US Government closes due to the 2024 budget impasse.