- The morning has been mixed in Chicago with corn/soybeans weaker while wheat is firmer. Chicago trade volume is being curtailed by Thursday’s USDA Crop Report with everyone waiting for the data. Fund managers see the stock market retreat on rising US interest rates are looking for other non-correlated opportunities. Commodities are near the top of their buy lists, and we doubt that any widespread selling pressure will develop in the grains. Soybeans are somewhat different (from grains) amid the lack of Chinese demand and potential for a US yield surprise. The fundamental view of the grains outperforming soybeans persists. The only real worry remains the amount of US soybean crop that remains unharvested across the W. Midwest and the E. Plains. Soybean quality concern is noted throughout the Delta, and issues of off quality beans are being felt much farther north into IA/S MN.
- A mixed Chicago close is expected today. We doubt that either the bulls or the bears will be able to push their case very far. The “odds-on” bet is a market that holds in a range into Thursday. World end users are hoping for a bearish report to make forward purchases. The October USDA report should delineate how big-is-big in terms of US corn/soy yields. Speculators are betting on a bearish report based on the August/September results. Anything less than a 182 bushels/acre US corn and 53.6 bushels/acre soybean yield will be positive.
- Chicago brokers estimate that funds have bought; 4,000 contracts of wheat while being flat in corn/soymeal while selling 3,100 contracts of soybeans and 4,300 contracts of soyoil. US export inspections for the week ending October 4 were; 53.2 million bu of corn, 20.9 million bu of soybeans, and 15.6 million bu of wheat. The corn export total was larger than expected while soybeans and wheat were in line. For their respective crop years to date, the US has exported 228 million bu of corn (up 87 million bu or 62%), 130 million bu of soybeans (down 70 million bu or 35%), and 269.5 million bu of wheat (down 109 million bu or 29%). The debate that traders are having is US wheat cheap enough vs. Russian offers that world demand is shifting to the US.
- Bangladesh purchased 120,000 mt of US HRS wheat for shipment this crop year. The purchase was a surprise and along with the Saudi purchase of US HRW wheat last week argues that US wheat export demand is ready to jump. We note that Russian 12.5% spread vs 11.5% has pushed out to a season’s high $11/mt.
- The central US GFS weather forecast shows hurricane Michael has become a dangerous storm and is gaining in intensity. The storm looks to make landfall as a strong Cat 3 or weak Cat 4 storm on Wednesday. This major hurricane is altering the N American weather pattern. The midday GFS is drier than was projected overnight across the W Midwest with rains of 0.50-1.50”. The diminished rain totals will help the harvest advance after a needed 5-7 days of drying. Cold air will be pulled southward from Canada and produce a frost/freeze across the N Midwest to help plant dry down. Also, a drier profile is offered during the 11-15 day period, which is a change. The midday GFS offers a drier forecast.
- The fear of another big yield increase is pressuring Chicago corn/soy prices at midday. We see the time for wheat to start a bullish move as near as export demand shifts to the US. US wheat is cheap vs Russian or EU fob offers.