- Chicago prices are mixed at midday the grains reversing early losses with wheat pacing the rally. December corn tested key support at $3.60 and reversed while KC December wheat bounced from trendline support at $3.70. The volume of Chicago trade has been better than expected with active profit taking noted in long soybean/short corn and long soybeans/short wheat spreads. We look for a mixed close with the expanding harvest of the Midwest soybean crop to cap Chicago soybean rallies. The market has a firm tone at midday with traders anxious about Wednesday’s NASS Stocks and Final Small Grains Report. A mixed and choppy trade is expected until there is clarity on US corn/soybean yields and Russian, Brazilian and Argentine weather.
- Chicago traders estimate that funds have bought 4,500 contracts of Chicago wheat and 9,000 contracts of corn, while selling 5,700 contracts of soybeans. In the products, funds have sold 4,200 contracts of soymeal while buying 1,900 contracts of soyoil.
- A weekend Australian frost has damaged the Victoria and South Australian wheat crops according to several cash sources. Actual losses are unknown. The cold weather across S Australia along with coming dryness for W Australia has supported expectations for a smaller wheat harvest. The Russian Ag ministry held a weekly grain export meeting that was termed to be “regular” according to industry sources. However, the ongoing acute dryness has Black Sea exporters discussing the chance that a mid October ministry meeting could lower 2021 Russian wheat export potential under quotas.
- The Russian Ag Ministry has promised to set export quotas during October for January to June shipments. Amid the acute dryness that is plaguing Russian winter wheat seeding/germination, Russian interior wheat/flour prices are back to historic highs. As the Russian Government is trying to combat local inflation, a reduction in old crop trade is in discussion. The trade will be sensitive to the mid-October meeting and Russian wheat export potential. The Russians appear to be exporting a record 5.2-5.7 million mt of wheat during September.
- The US exported 31.8 million bu of corn, 20.7 million bu of corn, and 44.5 million bu of soybeans in the week ending September 24. The corn exports were a touch disappointing while wheat was better than expected. For their respective crop years to date, the US has shipped out 109.6 million bu of corn (up 49 million or 45%), 178 million bu of soybeans (up 63 million or 54%), and 338 million bu of wheat (up 26 million or 8%). China shipped out 32 million bu of US soybeans or 73% of the weekly total. China also shipped out 6.6 million bu of US corn through the Pacific Northwest and the Gulf.
- The midday GFS weather forecast maintains blocking pattern aloft across SE Russia. This will deepen moisture deficits. The EU/Ukraine will see soaking rainfall, it is the Russian wheat areas that will hold in an exceptionally dry pattern.
- The N and C Brazilian weather forecast is arid into October 12. The chance of rain is not offered until late in the 14-day outlook and our confidence that far out is low. We maintain that it is worth closely following S American weather going forward as the window for seeding runs from Sept 20 into October 25.
- The midday GFS weather forecast has reduced rainfall with a passing cold front to 0.25-0.75″ across the E Midwest. The Plains and the W Midwest will be largely dry over the next 10 days. Temperatures stay cold for the E Midwest this week, but warm during the 8-15 day period. Harvest will strongly advance.
- There is a bull story in wheat due to Russian dryness that is impacting new crop seeding and germination. However, it is too early to be overly worried on N Brazilian dryness with just 1% of the Mato Grosso soybeans seeded. We would see a decline to $9.70-9.83 Nov to be well supported. The 200-day moving average is offering Dec corn support at $3.6025.