- The morning has been mixed with US wheat futures firmer while summer row crop futures hang with losses. Soybean futures have been able to trade on both sides, but corn values are firmly the red amid slowing US corn export demand and the expanding Midwest harvest. We look for a mixed close as Chicago grains remain rangebound awaiting the confirmation of Chinese demand for US grain and other ag products.
- Chinese sources report that a meeting between the Chinese Government and State Owned Enterprises (SEO’s) was held in Beijing. The meeting was to discuss US ag purchases following last week’s US/China verbal trade pact. The meeting ended without resolution for new US ag demand. Sources suggest the irritant of Hong Kong and a House Bill in support of the protesters produced today’s “no decision”. This could quickly change depending on the politics, but uncertainty of large/new Chinese ag demand persists at least for today.
- It is the constantly changing US/China politics and flow of daily media news which makes US ag markets so difficult. Note that yesterday, CME hog futures posted limit gains amid the rumour of China demand with these markets sharply lower today on US/China political concern. One must be careful in chasing Chicago/CME rallies and/or selling breaks.
- Chicago brokers estimate that funds have sold 4,400 corn and 2,900 contracts of soybeans, while buying 2,400 wheat. In soy products, funds have sold 3,200 contracts of soymeal while buying 1,100 contracts of soyoil.
- Egypt’s GASC secured 405,000 mt of Russian, French and Ukraine wheat. The breakdown is 285,000 mt of Russian and 60,000 mt each of Ukraine and French. The price is said to be $7-8/mt higher than their tender of just 10 days ago. This is confirming the Russian wheat rally in the interior and at port.
- US President Trump stated that the Phase One of the US/China trade deal is being papered and won’t likely be signed until he meets with Xi in Chile.
- However, China is angered by the House Bill favouring Hong Kong protesters and have threatening retaliation. Trump just stated again that China is already starting purchases of sizeable amounts of US ag goods and that “good feelings” persist. In the past, the US/China have been able to keep “other” politics out of the trade negotiations and Washington sources expect that will occur again. If China is making large US purchases, they should include; pork, soybeans and cotton. The US weekly export sales report is released Friday.
- Mexico was confirmed as buying 228,600 mt of US corn today. No new Chinese soybean or grain purchases were noted.
- The midday GFS weather forecast is like the overnight run with any heavy rains pushed into the east and SE US. Temperatures will be variable with a frost likely for the E Midwest by the closing days of October. Dryness is noted through Friday with rains on the weekend followed by dryness during the 9-15 day period. The rains on the weekend look to range from 0.15-0.85”. The US corn and soybean harvest will gain speed in the coming weeks across the Plains and W Midwest. US soybean harvest is becoming active in most areas.
- Midwest cash basis levels are starting to leak as farmers move their recently harvested crops against existing cash contracts or make new sales. And Brazilian farmers are also active sellers amid the Real vs the US$ at 4.16:1. The weakening S American currencies will to spur additional spring seedings. The Brazilian weather forecast features better rainfall.