- Midday Chicago ag markets are mixed in moderate volume as corn/soybean futures hold in the green while wheat sags on fresh fund selling. Chicago has struggled to rally, but sellers are lacking ahead of the NASS Weekly Crop Condition and Progress report. Most fund managers are positioned for a bullish USDA Crop Report on Friday as yield/harvested acreage totals are lowered.
- And the US Farm Service Agency (FSA) will be out later that day with updated program participation data. The USDA/FSA should help to add some supply certainty to the marketplace. We look for a mixed close with fund managers wanting to bank some profits heading into late week. A turnaround Tuesday is expected following 10 consecutive days of higher prices with rain falling across IA and the northern half of Illinois.
- Chicago brokers estimate that funds have bought 3,900 contracts of soybeans, 5,700 contracts of corn while selling 3,600 contracts of wheat. Funds have bought 4,100 contracts of soyoil and sold 2,300 contracts of soymeal.
- US export inspections through the week ending September 3 included 31 million bu of corn, vs. 17 million the previous week, 26 million bu of wheat, vs. 20 million the previous week, and 48 million bu of soybeans, vs. 30 million the previous week. For their respective crops years to date the US has shipped 9 million bu of corn, down 50% from last year (though this includes just three days of the new marketing year), 17 million bu of soybeans, down 19%, and 274 million bu of wheat, up 6%.
- Exporters also sold 664,000 mt of soybeans to China this morning, along with 100,000 mt of corn to unknown destinations.
- However, the recent collapse in energy values is acting to restrict future biofuel demand growth while at the same time weigh on select exporter currencies. The Russian Ruble is trading at a new 4-month low, which has paused the rally in domestic wheat there when valued in US$. Currencies in Australia, Canada, Brazil and Argentina are also slightly weaker.
- Futures-based US ethanol production margin remain positive, but ethanol prices in the days ahead are expected to fall in tandem with world energy markets. Note also that as of this writing, spot Chicago ethanol is quoted at a premium of $0.21/gallon premium to ethanol. Weekly US ethanol production has been stuck in a rather narrow range of 270-274 million gallons since early August. We doubt this will change in the weeks ahead as miles driven declines seasonally even in normal years. International travel restrictions are also returning following a brief hiatus during the second half of summer.
- The midday GFS weather forecast is slightly wetter across the E Midwest Sep 20-22 as rainfall of 0.50-1.00″ is projected across a narrow swathe of Central IL, In and OH. Otherwise, Central US weather into late month will feature soaking rainfall across the Southern Plains and Western Corn Belt into the weekend. Drier and warmer conditions follow in the 6-15 day period as the mean position of the jet stream is lifted northwards. A significant improvement in Plains soil moisture will occur just prior winter wheat seeding in TX, OK, KS and CO.
- It is all about US row crop yields, and to a lesser extent Black Sea corn yields, in the near-term. But equal attention will be paid to demand trends. Corn harvest is just beginning across the mid-South. Activity will be increasing there and moving northward over the next 2-3 weeks. Supply pressure is probable amid weaker domestic demand pulls, particularly in the case of corn. NASS’s Sep report must reveal substantial yield loss to prevent the liquidation of long positions in mid/late Sep.