- A mixed opening produced a new round of fund short covering in Chicago corn, soybeans and wheat this morning. The soybean market has been the upside leader on technical considerations amid a lack of producer selling. The soy market continues to be local, but think global in terms of the big premiums offered from Brazil. Moreover, Chinese soymeal values have started to advance. China has been able to secure its normal amount of soybean arrivals for September, and the US/China trade spat has not impacted the Chinese feed/livestock markets. Chicago soybean futures continue to hold in a broad trading range. We look for a mixed to higher close as funds exit short positions in corn and soybeans. The surprise has been that the rally has not uncovered much producer selling. Most are squirrelling away as much of their harvest as possible in the hope for basis appreciation and a US/China trade settlement.
- Chicago traders estimate that funds have bought; 2,100 contracts of corn, 1,900 contracts of wheat, and 3,400 contracts of soybeans. In soy products, funds have bought 2,400 contracts of meal and 800 contracts of soyoil.
- FAS US weekly export estimates on Thursday range from; 400-500,000 mt of wheat, 1.2-1.4 million mt of corn, and 775,000-900,000 mt of soybeans. The USDA announced the sale of 650,387 mt of US soybeans to Mexico as end users there extend their forward coverage.
- US President Trump indicated that China is trying to interfere with the US Mid-Term election because the US has been tough on China with trade. No examples have been offered, but that news could be another incident that could keep the parties from the negotiating table until late November or December.
- Brazilian corn loadings remain seasonally slow and research suggests that WASDE should further cut their Brazilian 2018/19 export estimate by 2 million mt. The further reduction of S American corn exports looks to boost US corn exports to a record large 2,500-2,600 million bu.
- The central US GFS weather forecast has come around to the thinking of the EU overnight forecast with tropical storm Rosa coming ashore across N Mexico and pushing inland into the SW US. This allows a series of weak storm systems to push through the Midwest, with heavier rains forecast for the Central US in the 11-15 day period. Cold Canadian air pushes southward into the northern tier of the US with regularity with snows indicated across the W Plains during the 11-15 day period. This is a cold forecast for the Central US during the first half of October. The cold and increasingly wet weather looks to slow the ongoing Midwest corn and soybean harvest.
- Corn is taking a break from its recent four day run with traders waiting to buy wheat following Friday’s NASS report. The US Central Bank is expected to raise lending rates . The US$ is stable at midday. A further hike is expected in December with 2-3 hikes expected in 2019. Long term without a trade agreement between the US/China, the grains should gain on soybeans. We are bullish of corn/wheat on Chicago corrections. Getting past Friday’s NASS report will clear the way for fresh grain gains.