- Green has been the colour in Chicago this morning as new buying emerged at the traditional 9:30 start time. We suspect overnight snow forecasts are the catalyst, but Monday’s Crop Progress report did lean positive amid upcoming challenging Central US weather. A close above $3.92, basis Dec 19 corn, will reflect a new 20-day high. This in turn likely attracts additional buying/short covering ahead of Thursday’s USDA reports.
- The midday US weather forecast is in line with morning output in that snow accumulation of 15-25″ will be widespread across the Dakotas. Regional accumulation upwards of 30-40″ are possible in eastern ND. The sheer amount of snow, and all within a 4-day time period, will cause massive logistical issues as well as widespread lodging and quality loss. Cooler temperatures next week will delay row crop harvesting in SD, ND and far western MN until late October. Interior US cash basis levels will stay supported at multi-year highs.
- It is estimated that managed funds this morning were short a net 112,000 contracts of corn, vs. 106,000 last Tuesday. Funds are also estimated to have been short 24,000 contracts of Chicago wheat, vs. 21,500 last Tuesday, and 9,000 contracts of beans, vs. 8,700 a week ago. Funds are covering as the 2019 US growing season will be challenged from start to finish.
- Egypt’s GASC has secured 295,000 mt of Russian and Ukrainian wheat for mid-November arrival. No other details are available yet, but the cheapest offer made this morning was Ukrainian origin at $201.90/mt, which compares to an average purchase price last week of $199.10.
- The midday S American forecast contains a much more normal pattern of rainfall across the whole of Argentina. Cumulative totals of 1-3″ will be widespread across Cordoba, Buenos Aires and Santa Fe over the next 12-14 days. These three provinces combine 70% of Argentine row crop production. However, dryness resumes across Central Brazil beyond the weekend. There is no sign that widespread rain returns to Central Brazil into Oct 23. It is tough to establish drought in Brazil during the winter months, but longer-term climate forecasts suggest a meaningful pattern change will be delayed until early November. Further cuts to US soy production will raise the burden on trend/above trend Brazilian soy yield.
- The midday GFS weather forecast is similar to the morning run but has raised projected snowfall in ND and parts of SD to over 30″. Otherwise, the frontal system along with heavy snow cover will funnel much cooler temperatures into the Central US. Overnight lows near/ below freezing will be widespread this weekend across the Plains and Upper Midwest, including IA and WI. Corn in IA as of Sunday had reached 52% mature, with WI at just 30%. A much drier pattern is projected Oct 13-20, but drying will be slowed amid cooler than normal temperatures. US harvest stays well behind average.
- Supply premium is being added amid blizzard conditions in the North and as more rain is needed in Brazil by early November. Additional net premium should be added into NASS’s Oct report. Next resistance lies at $4.01, Dec corn, $5.05, Dec Chicago wheat, and $9.25,Nov beans.