- Soybeans traded weaker overnight and ended the day 7-8 cents lower. Chicago Ag markets have had limited news to move prices directionally this week, but harvest is now advancing quickly and the collapse in the US equity market added to the bearish financial market sentiment. Funds on Wednesday were estimated sellers of 10,500 soybean, 7,000 soymeal, and 2,500 soyoil contracts. The EIA will release their monthly Biodiesel Production report next week, with data for the month of August. Estimated biodiesel plant returns during the month averaged $.71/gal, which was the best since 2013 and the highest in 2018. Strong margins continued through September, but the collapse in energy markets produced a break in B100 prices, and estimated returns. Initial support in soybeans is just below the market at $8.45, our view is that the market remains caught in a broad trading in the coming months.
- Dec corn fell 2 cents, thus erasing Tuesday’s rally. Fresh news data included a neutral weekly ethanol update and little else. US weather will be conducive to harvest progress into early Nov, while soil moisture boosts are scheduled for most S American corn areas. More than anything, the market lacks input. Better than expected Ukrainian yield and favourable S American weather, which is expected into late year will likely cap rallies for now. Ukrainian fob basis has fallen sharply as harvest there nears completion. Ukrainian corn is offered at level money with Argentine origin, and both are competing to be the world’s low-cost origin of feedgrain for spot arrival. Gulf corn is still competitive, particularly into Asia. And notice that, seasonally, Black Sea basis scores its bottom during or just after harvest. The US market does face competition nearby, but we doubt higher Ukraine yield materially affects the global corn trade matrix. US export sales are expected in a range of 38-43 million bu, vs. a meagre 15 million sold last week. We do not believe breaks will be long lived.
- Reportedly, an article suggesting the Russian government is not at all concerned about the pace of wheat exports triggered a large tranche of fund selling/liquidation. We cannot chase down the validity of these comments, but it remains the US export sales to date have been limited mostly to traditional buyers. Sales on Thursday should be a routine 15-20 million bu. The US$ ended sharply higher. Work suggests enlarged US export demand in the second half of the crop year remains intact. Gulf wheat is offered below Russian for Dec/Jan. Recall in 2016/17 final US wheat exports were 1,051 million bu despite there being no major exporter production loss. The world cash market is, very slowly, working to re-allocate world trade beyond November. Wheat’s chart pattern needs healing from recent damage, we do not see longer term structural weakness.
- Algeria’s state grain buyer OAIC has bought “around half a million mt” of milling wheat at tender, paying roughly 4% less than last time out, trading sources said Wednesday. OAIC picked up the volume for around $257/mt, according to market sources. Algeria does not publish results of its tenders, but the price is about $11-16/mt lower than its last purchase, with traders speculating France to be the most likely origin for the cargoes. Argentinian wheat can also be delivered, although given the timing of the shipment and pace of progress for Argentina’s harvest, it would make it a less likely candidate. Russian wheat will not feature despite exporters having made overtures to authorities in Algiers, as current quality specifications rule out imports with high bug damage.