- Midday Chicago markets are mixed with corn/wheat futures firm, while the soy complex sags amid the fear of reduced SE Asian soybean and soymeal demand. The volume of trade has been extremely slow with fresh news lacking. Wheat rallied on chart based buying as Chicago wheat rallied above its 50-day moving average which triggered short covering .
- Farmers are starting to report their initial yield results and they are mixed/variable. It is far too early for any real US yield trends, and of course, their reported yield findings to NASS are always questioned. The marketplace will be hearing actual yield reports in the weeks leading into December, but the October Crop Report and NASS’s harvest of their objective yield plots that will determine 2019 yield trends. We look for a mixed Chicago close as neither the grain rally or the soybean decline is able garner any real momentum. Resting orders are lacking above and below the market.
- Chicago brokers report that funds have bought 2,100 contracts of wheat and 2,400 contracts of corn, while selling 2,000 contracts of soybeans. In soy products, managed money has sold 3,200 contracts of soymeal while being flat in soyoil. It does not take much volume to move the markets around.
- China did not show up as booking any additional US soybeans this morning. With the China trade team in Washington, we expect that they want to see how the meetings go before encouraging any additional purchases. If these preliminary meetings go well and the US does not demand that China scale back state support of industries, additional ag demand could be found early next week. China likely wants to scale out its ag purchases over time to better understand the US’s trade position.
- We hear that China and the US are working on dates for the next high-level meetings. Mid October seems to be the earliest that negotiations could restart. The problem is that this is also the time that the US is expected to raise tariffs, following a 2-week delay. Raising tariffs during or ahead of the arrival of next Chinese trade team won’t sit very well with the Chinese.
- The lowest bid to GASC was $194.13/mt for Russian wheat. GASC has not defined how much wheat it will secure or from whom. Based on the bids, its likely to be filled by Russian and Eastern European origin supplies. It should be noted that the offers were numerous as competition from wheat sellers is keen. The abundance of wheat is likely to prevent GASC from paying more than $205/mt in early 2020.
- The US Central Bank will be announcing its interest rate decision later today. A 0.25% cut is expected which should not impact world ag currencies.
- The US National Weather Service has problems with its computer and the midday forecast is not available.
- Neutral Chicago outlooks are advised until clarity over actual US yields emerge in October. A S American drought is needed to raise the prospect of new “supply shock” and elevate fear in the marketplace of shortages. US corn and soybean yield declines can spark a Chicago bounce, but a push above $4.00 spot corn and $9.50 spot soybean futures require the loss of the S American crop or a US/China trade deal that is bigger than 3-5 million mt of US soybeans. Our view remains that a lasting top occurred this summer and that a new supply shock is needed for a major price recovery, prices look to be set in a range.