- World crude oil futures found new highs yesterday despite a sizeable build in US stocks. We note that US stocks are still somewhat tight and around 13% below last year. What is driving values higher currently are potential additional sanctions on Iran, and whether sanctions will act to severely depress Iranian exports. Sanctions in 2012 disrupted world oil trade flows considerably, and many are anticipating a return to $100 as sanctions loom.
- Ag markets are higher at midday amid a lack of producer selling, and to some extent amid frost this morning in the Northern US and coming excessive rainfall. Corn is leading the way on a percentage basis, and Dec oats at midday is up a massive 13 cents and is testing contract highs at $2.87. Short covering is the theme and higher closes are expected. Interestingly, the markets have shown resilience it the face of mixed input.
- Egypt’s GASC bought three cargoes of Russian wheat for Dec arrival at $234-237/mt, which compares to Egypt’s last purchase in mid-Sep at $226-228, but appears rather aggressive compared to fob quotes Wednesday evening. Egypt was offered 1 million mt of wheat, 655,000 mt of which was Russian and none of which was US origin.
- Informa raised US corn yield to 182.1 bushels/acre and bean yield to 53.0. Informa pegs US corn production at 14,890 million bu, 63 million above USDA. Informa pegs soybean production 4,677 million bu, 16 million above USDA. Based on crop ratings, steady to higher yields in next week’s report are likely, but unfortunately combine data from the Northern US won’t be available until late month.
- US weekly export sales were mixed, with wheat at the lower end of expectations, corn in the middle and soybeans well above. US corn sales through the week ending Sep 27 totalled 56 million bu, down 11 million from the prior week but well above the average needed to hit the USDA’s target. Wheat sales were a routine 16 million bu, vs. 24 million the previous week. US soybean sales totaled 56 million bu, up 24 million on the week and even 21 million above this week a year ago. Mexico was the largest buyer. 3.5 million bu of US beans were sold to Argentina last week. For their respective crop years to date, the US has sold 776 million bu of corn, up 63% from last year; 742 million bu of soybeans, down 13%; and 415 million bu of wheat, down 19%.
- The Brazilian Real is a bit weaker today, but quietly has rallied 7% in just two weeks. Brazil begins its presidential election on Sunday. Pro-business candidate Jair Bolsonaro continues to lead polls.
- The central US GFS weather forecast is drier in the 11-15 day period but is otherwise unchanged. Warmer and drier weather does lie ahead, but only after excessive rainfall and regional flooding impact the Plains and W Midwest. The GFS is still drier than its EU and Canadian counterparts, but precipitation accumulation next week of 2-3” will be widespread. Accumulation of 4-9” favors OK, KS, MO and parts of IA and IL. Gulf tropical activity also needs monitoring. The EU forecast this morning introduced a potential storm Oct 13-14. The GFS doesn’t include any landfall but does indicate Gulf activity in the extended period.
- Soaring oat futures, new multi-week highs in EU canola, and rising Egyptian tender results all suggest seasonal bottoms have been scored. New positions will be lacking ahead of next Thursday’s Oct WASDE release.
- Stratégie Grains have updated their latest UK cereal production estimates; soft wheat production is maintained at 14.04 million mt vs. 14.62 million in 2017/18. Winter barley output is estimated at 2.84 million mt vs. 2.95 million last year with spring barley at 3.97 million mt vs. 4.22 million last year. Quality for soft wheat was meeting specs based upon preliminary results, average specific weight was put at 77.7 kg/hl vs. 75.9 last year. Hagberg falling number levels were also improved on last year whilst protein at 12.4% is behind last year’s 12.8% but above the average of 12.1% (2013-17). Barley quality was also described as satisfactory with specific weight averaging 66.6 kg/hl vs. 64.5 last year. 2019/20 acreage trends were suggested to be between 2 and 4% higher compared with the 2018 harvest figure.