- Ag markets so far this morning have traded in narrow ranges, and current sit close to unchanged. Wheat has caught a bit amid stability in EU futures, and following recent world tender results that show the price of trade execution well above recent years. Uncertainty will continue with respect to final Russian production. Some of our contacts prior to the USDA’s report lowered winter wheat estimates. Very little of the spring wheat crop has been harvested following delayed seeding and cool/wet summer weather. Spring wheat yield results will be followed closely.
- It is also unlikely that wheat production differences in the Ural and Siberian Regions of Russia will much affect the country’s export potential. Spring wheat does account for 40-45% of Russia’s production, which is important, but very little spring wheat is put onto the world market. EU milling wheat futures ended up €1.00-1.25/mt. Spot WT crude is up $.50/barrel at $69. US crude stocks remain very tight, and are likely to tighten further into winter. We note that a host of world veg oil markets are now priced below crude, which is historically rare.
- Ahead of this afternoon’s CFTC report, we estimate that on Tuesday managed funds were long a net 28,000 contracts of Chicago wheat, vs. 43,000 the prior week. Funds were also likely short a net 65,000 contracts of corn, up 7,000 contracts, and were net short 65,000 contracts of soybeans, up 2,000 contracts on the previous week. Importantly funds today are estimated to be short a massive 120-125,000 contracts of corn, and are net long just 12-15,000 contracts of wheat. That funds’ net wheat position is near flat is noteworthy. There is still potential for massive shifts in demand to the US based on elevated fob offers in Europe, Australia, and even Russia for Nov-Jan delivery. The Aussie weather forecast now lacks meaningful rain through the very end of September.
- Better, and needed, rains are offered to key areas in Southern Russia in the 10-15 day period. Confidence in this is low, but the extended range outlook will be watched over the weekend. The central US GFS weather forecast is drier than the morning run across the S Midwest, but has added precipitation to the North in the 8-15 day period. Favourably dry and mild weather occurs on the weekend. Harvest is and will be active into the early part of next week. Thereafter a more zonally flowing jet stream evolves, and a much more active pattern of rainfall returns to the E Plains and W Corn Belt. Cumulative totals of 5-8” are offered to IA, MN and WI, again.
- NASS yields, on the margin, lowered the burden on US grain balance sheets. Still, positive seasonal trends are noted in autumn/winter, and solid corn/wheat export demand is forthcoming.
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