- HEADLINES: Chicago futures lower on sagging US cash markets, active Midwest harvest; Slow weekly us corn export sales.
- Chicago futures are sharply lower with corn, soybeans, and wheat in retreat. Wheat has been the downside price leader on fund selling and ongoing aggressive fob price offers from Russia and the Black Sea. The Ukraine continues to push out grain actively via the export corridor with traders noting that Russia has not made any fresh comments regarding the opening or the closing of the export corridor in 2 weeks. US rail and barge rates continue to rise amid logistical snarls and low water levels as the US harvest is in full swing. Chicago has a heavy feel with pre hedging expected ahead of the weekend. A lower close is forecast in a correction of recent day gains.
- Chicago brokers report that funds sold 7,000 contracts of wheat, 6,000 contracts of soybeans, and 8,000 contracts of corn. In the products, funds have sold 4,500 contracts of soymeal while buying 1,200 contracts of soyoil.
- FAS announced slow export sales which were expected. For the week ending Sept 29 the US sold 8.4 million bu of wheat, 28.6 million bu of soybeans and just 8.9 million bu of corn. For their respective crop years to date, the US has sold 401 million bu of wheat (down 18 million or down 4%), 520.6 million bu of corn (down 526 million or 50%), with US soybean sales at 925 million bu (up 86 million or 9%). The US soybean sales pace is the only grain running above last year’s pace. US corn export sales are falling well behind USDA annual forecasts.
- We hear that China has booked 2 cargoes of US soybeans off the PNW for November and is seeking another 2-3 cargoes for December. China is returning early from their holiday and is seeking the supply off the PNW for price and logistical reasons. We expect that China will be more active early next week with crush margins deeply green heading into the USDA October Crop Report.
- The loadout for Ukraine grain out of the export corridor continues to grow amid low price offers and growing confidence in October exports. The wait time to load Ukraine grain is now over 10 days. October could produce a strong export program out of the 3 corridor ports. Ukraine corn and wheat offers are highly attractive and continue to find new business as Black Sea freight rates soar.
- The US Labor Dept will be out with key US employment data tomorrow. We estimate that the US added 202-212,000 non-farm payroll jobs in September. This is below August and delineates a slowing jobs market into 2023 and a soften the dollar.
- The midday GFS weather model run is like previous forecasts. Key crop-growing regions of the Midwest/Plains stay in a below normal rain trend. Frosty temperatures occur Friday and the weekend with warming due next week. An open window harvest window will allow for quick harvest progress into October 20. The extended range forecast has backed away from offering rain for the Plains/Midwest to help river flows.
- Harvest pressure and a sliding US cash market is pushing Chicago grains lower amid a strong US$. Global cash markets stay weak with trade reduced on the recessionary outlook. Rising energy prices aid the US biofuel profitability and Chinese crush margins are again profitable. This has end users stepping up coverage on the break. We would look to sell rallies following the USDA October WASDE report next week. Spot Chicago corn above $7.00, spot soybeans above $14.25 and spot KC wheat above $10.50 is overvalued relative to slowing US and world export demand. A S American weather problem is needed to sustain a Chicago post-harvest recovery.