- HEADLINES: Chicago stabilises as the bulls and the bears talk their positions; Nicholas wind damage to be modest; Rain is the issue; Pakistan back for wheat.
- Chicago futures sank in opening trade on renewed fund selling following Friday’s relief rally following the USDA September Crop Report. The bears wanted to push down values following the initial bout of short covering to gauge the resolve of end users. And there was worry that Tropical Storm Nicholas could cause new disruptions to the electrical hook up of Gulf exporters amid the coming rain. Nicholas will make a Texas landfall this afternoon as either a tropical storm or weak hurricane and quickly dissipate into a depression by midday Tuesday. The remains of Nicholas will produce 2-4.00″ of rain for areas impacted by Hurricane Ida, but wind gusts more than 40 mph will be lacking. Nicholas could delay electrical restoration by 12-48 hours, but this system is not expected to produce new structural damage/widespread electrical outages.
- Good news at the Gulf; Bunge started loading vessels today and Cargill Westwego will be back this afternoon. The Gulf export market is coming back to life as electrical service is restored. And 2 ADM elevators are expected to be loading later this week. We reflect that the USDA did not cut 2020/21 US corn /soybean export estimates due to the wrath of hurricane Ida.
- US export inspections for the week ending September 9 were; 5.44 million bu of corn, 3.9 million bu of soybeans, and 20.13 million bu of wheat. The Gulf was virtually shut down with the exports occurring in the PWN, the Texas Coast or the Interior. As the Gulf comes back to life, the US export pace is expected to dramatically quicken. US weekly exports will now be improving.
- The biggest impact on the US corn/soybean balance sheets in the next 25 days will come from combine yield data/reports. NASS did not weight Midwest ears or pods with the US September yield estimate derived by using an implied ear/pod weight. Combine yield data will help determine if the implied NASS corn ear and soybean pod weight is correct.
- Last year, NASS pegged the US corn yield at 178.5 bushels/acre with US 2020/21 corn end stocks to be 2,503 million bu with the US soybean yield at 51.9 bushels/acre and 2020/21 US soybean end stocks at a huge 460 million bu in September. The final 2020/21 US corn yield was 172.0 bushels/acre (down 6.5 bushels/acre from September) with soybeans at 50.2 bushels/acre (down 1.7 bushels/acre) with end stocks on corn/soybeans significantly lower due to demand. A 6.5 bushels/acre drop in the US corn yield in 2021/22 would drop the US corn yield under 170 bushels/acre and soybeans near 49 bushels/acre. Both yields would be extremely bullish amid limited world exporter stocks and the lack of old crop carry in. Therefore, it will be so important to watch combine yield reports in the coming weeks.
- Pakistan tendered for another 500,000 mt of wheat following a purchase of 400,000 mt last week. And Iran has already taken 1.4 million mt of Russian wheat. The USDA is woefully low on Pakistan, Iranian, and Iraqi wheat imports and will be adjusting upwards bigtime in the coming monthly reports. The impact of Mideast demand has been to deplete the Baltic of milling wheat supplies. Russian wheat exports were record large in August as exporters moved supplies offshore as the export tax is forecast to rise October by $5-7/mt/week. GASC and Algeria having only marginal forward coverage.
- Stats Canada will be out in the morning with an update on Canadian Crop production as of the end of August. The last report was as of the end of July. Traders will be watching for declines in canola, oats, and spring wheat production.
- The market has many unknowns in between knowing combine corn/soy yield data, in between the planting of new Brazilian crop via dry weather, in between historically tight old and new crop US corn/soy supplies, in between planting new US/EU/Russian wheat crops, and in between knowing when the Gulf will be fully operational. The bears and the bulls argue that their positions have strengthened following the September USDA report. We believe that US corn/soy yields won’t match the USDA and that the Gulf is coming back faster than the bear’s desire. Bottoms take time (days) to form.