- Chicago wheat values are higher at midday with KC leading the advance. The world wheat market has pushed into a more dynamic bull phase based on SW Russian dryness (forecast to persist for 2 weeks). In weather bull markets, premium is added early and late in the week with a normal midweek sag.
- Summer Chicago row crop futures are sagging on the ongoing Midwest harvest and rumours that Argentina is being more aggressive in offering fob soymeal for export. US farmers report variable yields, but better than expected totals. Traders are deeply aware that funds are holding a massive net long position and that the market could drop sharply with any bad fundamental news. Friday’s USDA Crop Report looms and the trade worries that USDA could come out with yield totals that are little changed from September.
- Chicago has a bullish tone in wheat, but rallies in wheat/soybeans will be fleeting into the close. Key support rests at Friday’s low in December corn at $3.7825 and $10.14 in November soybeans.
- Chicago brokers report that funds have bought 5,900 contracts of wheat, while selling 3,200 contracts of soybeans and 4,200 contracts of corn. In soy products, funds have sold 5,400 contracts of soymeal while buying 3,900 soyoil.
- Monthly EU weather model forecasts were released this morning. The forecast calls for increasing rain for N and C Brazil while more normal rainfall is also offered for the drier areas of the Black Sea. Whether the EU model has it correct has to be witnessed, but the data suggests that traders need to be alert for improved Brazilian and Black Sea rainfall during the last week of October and throughout November.
- US export inspections for the week ending October 1 were 34.0 million bu of corn, 61.2 million bu of soybeans, and 23.6 million bu of wheat. The soybean export total was larger than expected and included 44 million bu of US soybeans to China or 72% of the total. China also shipped out 14.2 million bu of us corn.
- For their respective crop years to date, the US has exported 144.4 million bu of corn (up 64 million or 81%), 242 million bu of soybeans (up 88 million or 56%) and 363 million bu of wheat (up 33 million or 9%).
- Mato Grosso has planted just 2% of its soybean crop based on ongoing dry weather conditions. Plantings look to expand later this week as rains are forecast to fall, but since the Mato Grosso has delayed soy seeding, the new crop soybean harvest will be limited until late January with exports seasonally increasing in February, about 3 weeks later than normal.
- Accordingly, we have raised our 2020/21 US soybean export estimate to 2,275 million bu as China will likely secure another 3-3.5 million mt of US soybeans to fill the January void offered by the Brazilian soybean seeding delay. The additional demand has dropped US 2020/21 soybean end stocks to 320 million bu.
- The midday GFS weather forecast offers generally dry and warming weather conditions over the next 10 days. The Central US soybean and corn harvest will accelerate through the weekend. A likely hurricane will trek northward into LA and MS on Friday/Saturday which is like the EU model. This storm looks to trek into the Delta and produce heavy rainfall of 4-7.00″. This could cause issues for any remaining harvest next week. There is a chance for Central Plains rain, but totals of 0.25-2.00″ look to be focused on ENE and C and E KS. Any rainfall is welcome for the Plains for HRW wheat.
- Chicago has lots of uncertainty ahead of it this week including Friday’s USDA October Crop report, a potential Gulf Hurricane, Brazilian and Russian weather, China’s return from a week long holiday, and US politics and whether another Covid-19 aid package can be cobbled together. Amid funds that are heavily long, the trade will be sensitive to bearish news, but it is a buy any sharp break until big S American soy/corn harvests are confirmed in early 2021. Market volatility will be lasting.