- HEADLINES: Chicago corn above its 50-day moving average for the first time since July; Rumours that a Ukraine cargo ship struck a sea mine in the new corridor; GFS weather forecast drier across northern Brazil.
- Chicago grain markets are higher at midday with corn reaching above its 50-day moving average for the first time since July 28. Wheat futures have pushed to new weekly highs on the news that the Russian Government pegged their 2023 wheat crop at 90 million mt following a Rosstat stocks report that showed less than expected stocks in the hands of farmers. Chicago wheat is testing its 20-day moving average at $5.81 basis December. A close above $5.81 Dec Chicago will spur additional short covering with wheat trading 40 cents above Friday’s low and funds holding an estimated net short position of over 100,000 contracts.
- Soyoil futures are lower on the 2 day fall in energy values and the acute weakness in crude oil. WTI crude oil futures are down $1.30 and testing key support on the charts at $80-82.00. We would point out that it is order flow that is directing commodity valuations with few small traders or small funds trading. The market is being pushed up and down by large funds and their daily trading activity. We look for a strong Chicago close with Chinese traders returning from their Golden Week holiday on Friday and Monday. Soyoil prices appear to be too cheap relative to renewable diesel demand and the price of alternative vegoil and tallow prices. A bottom should be forming against $0.55.
- Chicago brokers report that money managers have bought 6,600 contracts of wheat, 17,500 contracts of corn, and 2,600 contracts of soybeans. In the products, funds have bought 4,600 contracts of soymeal while selling 3,400 contracts of soyoil. Chicago soyoil futures are closely following the intraday price moves in crude.
- FAS/USDA for the week ending September 28 that the US sold 10.0 million bu of wheat, 71.5 million bu of corn, and 29.7 million bu of soybeans. The US soybean sales lag is all due to Brazilian soybean exports and the hangover from the record 155 million mt crop. Brazil has now sold/committed for export 98.6 million mt of soybeans, so its old crop export program is finished.
- The Russian government estimated their 2023 wheat crop at 90.0 million mt, down 15 million from last year, but above the WASDE forecast of 85.0 million mt. The Siberian wheat harvest is just 57% completed. It is a sad issue in Siberia with rain producing constant quality and production falls. A year ago, Russian claims that its farmers harvested a monster wheat crop of nearly 105 million mt. The odds are high that this year’s harvest will end up between 87-89 million.
- Rosstat estimated Russian Sept 1 on farm wheat stocks at 28.8 million mt, down 9% from the year prior. The smaller stocks have some wondering of the USDA was right in forecasting 2022 Russian wheat production at 92 million vs 104.2 million mt.
- The midday GFS weather forecast is like the overnight run with showers falling in the next 24 hours across the E Midwest followed by a long stretch of cool/dry weather. The next chance of rain occurs from October 12-13 with rains of 0.4-1.50”. However, the rain is forecast to miss the Central Plains, which is far different from what the European model was forecasting overnight. Cooler temperatures start later today with Midwest highs retreating to the 50’s and 60’s with a frost/freeze this weekend. The relative chill lasts through next week with warming in the 11–15-day period.
- A smaller Russian wheat crop (and stocks) total argues that wheat has scored its annual low as pressure for Russia to actively export wheat subsides. Corn is following to the upside but will struggle to rise above $5.20. Argentine wheat crop ratings are expected to fall later today while Chicago soyoil futures bottom with energy. Group 3 Midwest soybean yields are disappointing on September heat/dryness. There are rumours that a Ukraine cargo ship has hit a sea mine which caused damage. Wheat is the upside Chicago leader.