- HEADLINES: USTR seeks new trade talks with China, no new revelations; Stonex crop estimates this afternoon.
- Chicago futures are mixed at midday with corn/Chicago wheat firmer with soybeans/KC wheat weaker. December oats did reach a new historic high this morning $6.05, exceeding the prior high set in 2014 at $6.00. Old time traders used to argue that oats were the bellwether for Chicago since it was a mostly commercial marketplace. We note vegoil markets and oats are testing historical highs, and price is reflecting ongoing strong demand for each. Demand rationing has become more difficult as supply chains are disrupted and end users lay down additional supply, just in case.
- Soy futures are weaker amid the ongoing harvest and reports of better than expected yields. Fund managers are entering short new positions that puts them long of grain and short of soybeans. However, soy product prices have not been falling as fast with key support for spot soymeal offered at $310-320/ton, a level where the bull market started last year. Chicago spot soymeal below $310.00 would appear cheap relative to other feedgrain prices. This meal price correlates with November soybeans finding solid support at $12-12.10. Beans are likely to keep leaking lower until the US harvest surpasses 50%.
- The US Gulf export corridor continues to recover with weekly exports of 88.4 million bu last week of all grains. We understand that 25-30% of the Gulf remains closed or is compromised by Hurricane Ida. In the coming weeks, we are hopeful that just 10% of capacity is offline.
- For the week ending September 30, the US exported 31.8 million bu of corn, 31.0 million bu of soybeans, and 22.5 million bu of wheat. We expect that in the coming weeks, US soybean exports should ramp up to 50-70 million bu/week with corn getting back closer to 40-50 million bu. The US has an estimated weekly export capacity of 147-152 million bu, so improved exports are expected. China did ship out 5.5 million bu of US corn and 13 million bu of soybeans.
- The USDA reported that Mexico purchased 426,800 mt of US corn. The sale is likely related to the cola bottling industry in Mexico and their locking down margins in the year ahead. The cola bottling industry often uses the midpoint of harvest to make longer term purchases.
- StoneX is expected to release their October yield estimates this afternoon. Back in September StoneX estimated the US corn yield at 177.5 bushels/acre with a soybean yield of 50.8 bushels/acre. An October corn yield above 176.0 or a soybean yield above 51.5 is needed to be bearish. StoneX forecasts final US corn and soybean yields, not what NASS will be saying on October 12.
- The midday GFS weather forecast is drier across the Plains and slightly wetter across the SW Midwest over the next 10 days. Any meaningful harvest delayed rainfall will drop across the SW Midwest and E Kansas. The remainder of the Plains stays arid which will slow wheat seeding and germination. An above normal temperature pattern is forecast for the Central US with highs in the 70′s/80′s. The warmth will continue to speed the harvest.
- The market is focused on building world demand for US grain with farmers holding off on corn sales in the US and Ukraine. Corn and wheat will remain the upside Chicago leaders while soy futures leak to a harvest low either right before or after the October 12 USDA report. China should return as an active buyer late week as their Golden Week Holiday ends Thursday. The Biden Admin new China trade initiative to press for trade talks and for them to fulfil their promises. This should produce enlarged buying by China into late 2021. China would like to enter into a Phase 2 agreement much like the Phase 1 if the US will gradually cut its tariffs.