- It has been a surprisingly bullish session in Chicago, with Dec corn up 9 and Nov beans up 18 at midday. Wheat has been flat, with market-specific wheat news lacking and with EU futures aiming to settle unchanged. Confirmation of USMCA (previously NAFTA) sparked this morning’s short covering effort, and recall that as of last Tuesday managed funds were short a net 113,000 contracts of corn and 59,000 contracts of beans. The United States-Mexico-Canada agreement mostly touches on auto manufacturing, intellectual property and dairy, but the deal will keep grain flow within N America intact. Crude’s rally is attracting more investment in raw materials as a whole, and commodity indexes look to recover further from mid-summer’s collapse.
- Spot WTI crude is up another $1.40/barrel to new highs. Brent crude’s premium to Malaysian palm oil has widened to $109/mt, which is historically high. The Dow, as expected, is up 200 points. The US$ is up slightly.
- US export inspections through the week ending Sep 27 included 53 million bu of corn, 22 million bu of soybeans and 14 million bu of wheat. All were within trade expectations, but the pace of US corn exports is still much better than that needed to meet the USDA’s forecast. Corn shipments over the next 48 weeks need to average just 42 million bu. For their respective crop years to date, the US has shipped 174 million bu of corn, up 47% from last year; 108 million bu of soybeans, down 26%; and 254 million bu of wheat, down 31%.
- Brazilian soybean exports have now matched the USDA’s forecast. The USDA in its Sep WASDE put Brazilian soybean end stocks 1.1 million mt. The world’s soybean surplus now rests solely in the US. Most tonnages of Argentine demand for US beans is expected as Argentine domestic stocks are replaced. There is also some measure of attention being paid to coming rainfall in the US, which looks to continue well into the middle part of October. A wide band of rainfall worth 3-6” is offered to KS, NE, IA, MN and WI next week. Corn harvest this afternoon will be pegged at 24-28% complete. Soybean harvest should have reached 22-26% finished.
- The Aussie forecast features needed rainfall of 0.25-1.00” across some of the driest areas of New South Wales late this week. It is too late to meaningfully affect wheat potential, however, and dryness resumes thereafter. There is also growing concern over winter rapeseed seeding in Europe, where near zero rain is projected in the next two weeks.
- The central US GFS weather forecast is little changed, if a bit warmer across the Great Lakes next week and beyond. Scattered showers dot the Northern Midwest over the next 24 hours. A pattern of lasting rainfall begins Thurs/Fri and continues unabated into Oct 11- 12. Snow favours the Canadian Prairies and North Dakota.
- A new North American trade agreement is noted, but we view recent market action as simply traders finding value in current prices. World cash wheat prices have bottomed, and it is tough to know just how high is high with respect to autumn/early winter US corn export demand.