- Chicago steady/higher at midday; US sells beans to China; Canadian wheat stocks larger than expected.
- Chicago ag futures are steady to higher at midday, with soybeans still the leader on additional Chinese pricing, the ongoing absence of rainfall in Central and Northern Brazil in late month, and partly due to questions over USDA’s yield revisions on Thursday. Crop ratings even this afternoon will support a national yield corn yield above 180 and a soybean yield above 53, but the lack of rainfall since Aug 1 across key parts of NE, IA, OH, and the southern Midwest. This places a greater emphasis on combine data beginning late Sep/early Oct. We doubt there will be many statistical fireworks in Thursday’s release, but the market is equally aware of that seasonal price trends transition from bearish to neutral at late summer.
- Exporters sold another two cargoes of US soybeans to China this morning. We would maintain that while annual US soy exports will be a function of Brazilian production in early 2025, China and others will be active purchasers of US origin between now and the holiday season.
- Stats Canada pegged 2023/24 Canadian wheat end stocks at 4.6 million mtg, vs. USDA’s estimate in August of just 1.8 million. Higher than expected wheat stocks were a function of upward revision to 2022/23 end stocks, Stats Can is notorious for large retroactive revisions, which were increased from 3.5 to 5.6 million mt.
- Larger Canadian stocks have most pressured Dec Minneapolis wheat, and assuming no change to US HRS yield, there will be abundance of N American spring wheat available in autumn and early winter.
- Stats Can pegged 2023/24 canola end stocks at 3.1 million mt, vs. USDA’s projected 2.0. Total domestic consumption and exports were below USDA’s forecast in August, but stocks of 3.1 million mt were largely expected by the Canadian trade. Nov Canadian canola at midday is $11/mt. Unlike wheat, there is concern over 2024 Canadian canola production following bouts of heat this summer.
- Nov Brazilian corn is up $0.11/bu at $5.11, with the nearby market there trading above $5.00/bu for the first time since March. Brazilian dryness matters little today but will warrant attention in October. And the issue is that short, and medium-term guidance offers no real change from current dryness and incredible heat across key areas of central and northern Brazil. High temperatures this week in southern Mato Grosso and Mato Grosso do Sul will reach 103-105 degrees. We view any sustained heat/dryness in Brazil this autumn as more threatening to corn supply and demand given the precarious nature of safrinha seeding dates and Mar-Apr rainfall.
- Export inspections included 33 million bu of corn, vs. 38 million the previous week, 13 million bu of soybeans, vs. 18 million the previous week, and 21 million bu of wheat, vs. 22 million the previous week. USDA will increase its 2023/24 US corn export forecast 25-40 million bu, keeps its soy forecast unchanged, and very likely hikes 2024/25 US wheat exports by 15-25 million bu. River levels along the lower Mississippi are a concern, but Gulf loadings have performed normally so far in September.
- The midday GFS weather forecast is slightly drier in IL/IN, but the overall pattern is consistent. Tropical storm six makes landfall on Wed/Thurs in LA and moves across the Delta and into the TN, KY, and southern Midwest over the following 2-3 days. Rainfall of 2-4” blankets LA, MS, AR, TN, KY, and far southern parts of IL and IN. The remainder of the Corn Belt stays arid into Sep 19. Temperatures warm steadily into late week, peaking in the 80s on Wednesday.
- Net soil moisture loss continues across the C Plains, W Midwest, and Great Lakes, but a smooth/quick harvest is anticipated. Helpful showers also projected to impact the TX/OK panhandles Sep 18-19, though confidence in details there is low.
- It is a pre-report short covering session. Seasonal recoveries are typical in all markets between late summer and mid-winter, but the intensity and speed of 2024’s recovery first requires clarity over crop sizes.