- Chicago values fell in early active trading with values recovering into midday with wheat being the upside leader. The market fell into end user support with the recovery occurring on reduced volume. The wheat rally appears to be largely technical as KC wheat fell to multiyear lows but did not fall below last week’s low.
- Traders are debating what NASS/USDA will say in Thursday’s September Crop Report. NASS will have difficulty measuring yield amid the immaturity of this year’s crop. The industry fears that NASS will overstate yield once again.
- Traders are really wanting harvest data to make a more accurate assessment of yield. We would maintain that this year’s corn and soy crops are so variable that it will require the US corn/soybean harvest to push beyond 60% to have real ability to measure crop size. And although there are reports of scattered corn fields that are being cut in the Southern Midwest this week, most of the Midwest harvest will wait until October and November. The one certainty of the 2019 harvest is that it will be a long drawn out affair with some farmers cutting corn and soybeans until the snow falls in December. We are looking for a slightly higher close with weekly lows likely scored this morning.
- The USDA indicated this morning that US farmers in disaster areas will be eligible for additional Government payments as outlined in spring disaster legislation. Some $3 billion of additional monies will be available to farmers impacted by natural disasters in 2018 and 2019, including late winter and spring flooding and Hurricane Dorian. This will include additional 10% PP payment (indemnity) to producers that were unable to plant a crop. If a producer was enrolled in the Harvest Price Option (HPO) there could be an additional 5% on top of the 10%, for a total of 15%. Producers need to enroll for the additional payments, and if a producer is not in a disaster area, he/she can petition the FSA State Committee to be included. The additional monies will further slow the sale of cash corn/soybeans as producers see additional revenue from the Government and store their crops in the hope of higher prices.
- US weekly export inspections for the week ending September 5 were; 23.3 million bu of corn, 33.3million bu of soybeans, and 14.8 million bu of wheat. For their respective crop years to date, the US has exported 17.7 million bu of corn (down 9 million from last year or 33%), 18.5 million bu of soybeans (down12.2 million or 40%), and 257.2 million bu of wheat (up 48 million or 23%). The US corn and soybean export pace is expected to fall further behind last year amid China’s absence as a soybean buyer/importer (as of today via the trade war) and cheaper fob price offers from Argentina, Brazil and Ukraine in corn.
- Brazilian farmers are starting to prepare to seed their 2020 corn and soybean crops as September 15 is the date that seeds can emerge. The acute dryness across N Brazil will limit early seeding progress with producers hoping for seed germinating rains later this month or by early October. The ridge of high pressure across Brazil looks to be stable and needs to be closely watched for any early spring dryness.
- The midday GFS weather forecast is consistent with the overnight and prior day solutions. A high-pressure ridge across the Central US with a zonally flowing jet stream produces warm temperatures and wet weather conditions across the N Plains and the Upper Midwest. There is no evidence of any frost/freeze into Sept 25. A hurricane is forecast to track across the far W Atlantic. This storm shifts the ridge westward to the Rockies and draws cooler temperatures south. The temperatures are not cool enough to produce a frost.
- Chicago corn is within 3-4 cents of testing a weekly trend line basis spot Chicago corn at $3.375 while KC wheat is bouncing off multiyear lows. Soybeans are holding better amid the yield uncertainty with plants just podding. We look for steady or 1% gain in US corn/soy good/excellent conditions. Our view is that the Chicago is in a bottoming phase in corn, wheat and soybeans.