- Chicago weaker at midday with dry weather forecasts supporting soybeans; Black Sea FOB wheat unmoved; GFS forecast dry for the Midwest.
- It has been a red morning in Chicago with corn, soybean, and wheat futures lower. The oil share spread is gaining, with soymeal retreating from recent day gains as oilseed workers appear to be in a deal with crushers. Large US corn/soy yields are being reported by private analytical firms with the September USDA Crop report just a week away. This is the first actual survey report from NASS and a record large US soybean yield/crop is anticipated. Wheat futures are in decline as Black Sea cash wheat markets are unmoved by the recent Chicago/Paris rally. Russian fob wheat ended the day at $217/mt, the same price as late August. Russia exported a record 5.0 million mt plus of wheat during August with similar large exports to occur in September.
- The USDA reported that China booked 126,000 mt of US soybeans with 189,700 mt sold to unknown destination. This helps confirm that China booked 5-8 cargoes of US soybeans on Tuesday. We understand that China continues to seek and book US soybeans on a daily basis. Note that the weekly USDA/FAS export sales report will be released on Friday due to the Monday Labor Day holiday. Another week of large US corn/soybean sales are expected.
- US corn and soybean crop maturity is being pushed by the dry/sunny/mild September weather with corn harvest to start in earnest by the end of next week. Farmers had hoped that the 2024 corn crop would dry down quickly, and that is what is occurring. Should the dry weather last for another 2 weeks, the Southern and Central US corn harvest could be in full swing by September 21. The market is sensing harvest hedge pressure starting this weekend. The soybean crop is also maturing quickly with the harvest in April planted beans to commence in late September.
- The Brazilian Senate approved a bill yesterday that would create an expanding national program for green fuels into early 2030. The Fuels of the Future Bill was overwhelmingly approved by the Brazilian Senate with the amount of soyoil to be blended into Brazil’s diesel supply to rise 1% each year until it reaches 20% by 2030. This would be a massive increase in Brazil’s domestic soyoil use in the years ahead. Currently, Brazil is blending 14% of its diesel supply with soyoil and the country may have to import Argentine soyoil to meet its domestic 2024 mandate before the new 2025 harvest.
- The Fuels of the Future Bill also set Brazil’s ethanol percentage in gasoline to reach 27% and vary within a range of 22-35%. Currently, only 18% of Brazil’s gasoline supply is blended with ethanol. Brazil is pushing to dramatically increase its blend of green fuels into its domestic fuel supply which would aid its farmers. The Fuels of the Future Bill requires passage in the Lower House and signature by the president before it becomes law. It is important legislation to follow for world agriculture.
- Canadian canola futures are bouncing as it is possible that China could import its canola into yearend. However, Chinese importers would likely have to get government approval to make sure it did not fall foul of China’s trade intentions. If history is a lesson, it is feared that Canada/China trade dispute will take years to resolve which is unnerving for Canadian farm income.
- The midday GFS weather forecast is unchanged with dry and warming temperatures forecast for the next 10 days. Topical activity soaks parts of the Southeast and Florida, but a lengthy period of dryness and normal/above normal temperatures is forecast for the Central US. Highs in the 80s will be widespread across the Midwest with 90’s across the Plains next week.
- Chicago traders will be looking forward to the USDA September Report in 5 trading days and the onset of the 2024 Midwest corn harvest. Black Sea wheat prices are well below the US/European offers and are gathering world demand. S American corn premiums are in retreat as the Brazilian Real stays weak which is sparking farmer selling. Central US dryness is a supportive Chicago price feature. The sharp decline in Chicago grain open interest speaks of sizeable short covering in recent days.