- Sideways and dull has been Chicago with corn, soybeans and wheat trading either side of unchanged. Chicago grain values appear to have reached a level of value until fresh fundamental news is available. Few traders want to expand their risk and US farmers (other nationalities too) are not willing to sell cash grain at today’s price (following the recent meltdown).
- The corn/soy markets are finding support on 2019 yields being below last year and cash basis levels that are premium. We see the cash basis strength as related to the late start of harvest and tightfisted farmer holding. Both will act to underpin breaks. But end users see no reason to chase rallies which leaves Chicago in limbo. Our best guess is tyat Chicago markets will range trade heading into the September 30 Stocks/Seeding report. Next week’s trade will depend on the news emanating from the US/China deputy trade meetings in DC. Will China return and secure additional US ag products next week.
- Chicago brokers report that funds have sold 1,400 contracts of wheat and 1,900 contracts of corn, while being flat in soybeans. In soy products, funds have bought 1,800 contracts of soymeal while being flat in soyoil.
- The weekly US export sales report offered better sales totals for US corn and soybeans than prior weeks. The US sold 10.5 million bu of wheat, 57.7 million bu of corn, and 63.5 million bu of soybeans. The biggest corn buyer was Mexico taking 45.5 million bu (79%) while China/unknown buyers (likely China) secured 37.5 million bu of US soybeans (60%). Mexico was also the largest buyer of US wheat.
- For their respective crop years to date, the US has sold 452 million bu of wheat (up 77 million or 21% from last year) with US corn sales down 311 million bu or 48% at 341 million with US soybean sales down 37% at 411 million bu. US corn and soybean sales are at multi-year lows and this week’s sales to Mexico in corn and China in soybeans does not alter that negative trend.
- The Brazilian Real is priced at 4.14:1 US$ with the Peso priced at 56.7:1 this morning. The weak Real/Peso is encouraging S American farmers to expand their 2020 seedings/production.
- Argentina is offering fob corn at 39 cents/bu less than the US Gulf for October with their discount being 37 cents/bu through January. US soybeans are the cheapest in the world at $334.50/mt ($9.10/bu)while fob Russian wheat is holding at $186/mt or $5.065. US grain lacks export competitiveness into 2020.
- The discount of non-US wheat/corn means that any sustained Chicago rally must be based on a supply dislocation, plainly, adverse weather. Central US harvest and S American weather will key any Chicago rallies going forward.
- Portions of IA and W IL are drier while the areas to the north and south are slightly wetter. The forecast is equally as warm with there being no evidence of a Midwest frost/freeze for another 14 days. A ridge of high pressure will hold across the SE US with Gulf moisture being pumped northward into the Central US. Frequent rain chances follow which could delay the summer row crop harvest. Some 80-83% of the US corn should reach the dent stage by Sunday with each passing warm week adding to 2019 US yield potential.
- Chicago values are adrift. Yesterday, soybean futures were down 5 cents, today they are up 5 cents. Grain values are mixed. China is back pricing Brazilian soybeans for late October and November. The Central US weather forecast is warm/wet and harvest delays must be monitored. Our view is sideways into the end of September.