- Chicago corn and wheat are higher at midday as support has been found at major chart-based support in corn. Open interest in Chicago wheat on Wednesday was up 4,600 contracts, which suggests funds and end users are willing to bet on a seasonal low being formed. Soybeans are down 12-14 on falling ClF Gulf basis levels, with spot basis down $.06/bu to just $0.14 over.
- CNBC is reporting that Chinese insiders hint that high-level US/Chinese trade talks in early October may be more substantial than prior meetings. The coming meeting marks the 13th round of negotiations between the two sides, and there is something to be gained ahead of an election year and following unrest in Hong Kong there is speculation that new developments will arise. The Dow has extended its recovery and at midday is up 430 points.
- Weekly EIA ethanol data leans bearish. Through the week ending August 30, US ethanol production totalled 298 million gallons, down 7 million on the prior week and the lowest since March. Using official NASS corn used for ethanol data through July along with EIA weekly data for August, we put final old crop corn ethanol consumption at 5,400 million bu, vs. USDA’s 5,425 million.
- Weekly US ethanol stocks totalled 1.0 billion gallons vs. 965 million a week ago. The US ethanol market is well supplied. Future corn consumption remains a concern unless solid US ethanol exports can be sustained. Note that Brazil has raised its tariff-free quota on ethanol imports to 198 million gallons, vs. 160 million previously. New destinations for US ethanol are desired though.
- US crude stocks, less reserves, as of Aug 30 fell to 423 million barrels, a new 2019 low. Spot crude has rallied $1/barrel to $57.20. US crude stocks are likely to decline further into late year as US rig counts decline.
- Newly released EU model climate guidance features normal to slightly below normal Central temperatures for the month of September, but warmer than normal temperatures during Oct and Nov. Confidence so far out is low, but forward-looking models lack evidence to suggest a major frost/freeze event lies in the offing. Near term forecasts have trended warmer since Tuesday. Patchy frost is possible in parts of Ontario, but otherwise major North American Ag areas will stay frost-free into Sep 20.
- EU model forecasts also feature lingering dryness in Brazil and Central Argentina into late October. A more normal pattern is forecast in November and beyond. Neutral ENSO conditions into late year argue against lasting S American drought during key corn/soy growing stages. Soil moisture available to Argentina’s wheat crop is a concern.
- The GFS weather forecast at midday is cooler across the Dakotas and MN in the 6-10-day period as a weak frontal system brings cooler and wetter air to the Northern US Sep 13-15. Lows across the Dakotas, MN and WI are again projected to drop into the mid/upper 40s late next week. We view the midday GFS as being too cool, but a close eye will be kept on whether the evening run of the EU model follows this trend. Other climate scientists hint at ongoing Central US warmth into final week of September. Broadly, the upper air flow is expected to stay rather progressive, which is the wrong setup for a mid-Sep frost event. Moderate to heavy rainfall worth 0.25-2.00″ impacts the Dakotas and NW Midwest Sun-Tues.
- Ag markets look likely to chop into next Thursday’s Sep WASDE. The bulls and bears will struggle for leverage amid weak global cash grain markets, but already sizeable net short positions in Chicago.