- NASS reported that 59% of the US corn crop and 58% of the US soybean crop were rated good/excellent, the same as the week prior. 34% of the US soybean and 29% of the US corn crops are now harvested with NASS to halt condition ratings once 50% or more of the harvest is completed. We expect that both the US corn and soybean harvest should surpass 50% either late this week or sometime next week. The US farmer is actively pushing ahead with harvest amid warm/dry weather conditions. Normally (historically), harvest lows are formed by the Columbus Day holiday on Monday.
- Malaysian November palmoil futures rocketed 163 ringgits higher and closed at a NEW record high 4,855 RM/mt for a spot futures contract. The record large palm imports by India during September and faltering production outlook should elevate palmoil values well into early 2022. The new highs in canola, rapeseed and now palmoil futures has placed a peg of support under Chicago soyoil values.
- The USDA October Crop Report looms next Tuesday with the US corn/soybean harvest to be nearly 50% completed by then. US and Ukraine farmers are not selling newly harvested corn. We hold to a bullish view in the grains. Crude oil futures have just scored a fresh three year high with the next upside target at $80-84.00. A cold early winter across either Europe or N America could push crude oil to $90.00.
- Chicago futures are mixed at midday with the soy complex posting strong gains while corn/wheat relax on the unwinding of prior spread positions. Long wheat or corn against soybeans was a popular trade ahead of the September Stocks report. The position paid off handsomely, but the key question going forward is the October USDA crop report next week Tuesday (Oct 12) and what NASS will say on US corn and soybean yields.
- Current November soybean futures have dialled in a 51 bushels/acre plus yield and growing stocks. We would remind that soybean prices are a function of G3 (USA, Brazil & Argentina) soybean stocks and the price of corn. We expect that the price of corn will hold or even rally which will act to underpin the complex. Moreover, the rally to record highs in palmoil/canola oil along with the buildout of the US renewable diesel industry has produced a strong demand story for world vegoil prices in the months ahead.
- Yet, until the 2021 US soybean crop is better determined, the upside price target of $0.62-0.63/pound basis December soyoil should capture the upside price potential. A smaller US soybean crop would be seen as bullish, but with crush margins at some of their best levels in years and spot WTI crude oil futures targeting $80/barrel, it is all about soybean availability and boosting US crush rates. US soyoil export sales are at record lows, so it is all about domestic crush and renewable diesel demand.
- US cash corn basis bids keep climbing with reports of $0.37/bu over said to be paid for 2 week delivery corn in Central Illinois. Most posted Central Illinois bids are resting at $0.30-0.35 over with Cedar Rapids, IA paying $0.25 over. End users are concerned that with ethanol margins so strong, that they need to restock their supplies. In fact, ethanol, exporters, and feeders are all looking for additional cash corn movement and concerned that the pipeline may not be fully restocked by the end of harvest.
- Argentina has suspended new corn export licenses which stand at 38.6 million mt vs USDA estimate of 37.5 million for the 2020/21 crop year.
- The Argentine old crop corn export program is winding down, and with the Ukraine farmer waiting for their corn crop to dry down in extremely wet weather, the US corn market will soon become the default for importers. Brazilian corn offers are exceptionally limited with feed wheat trading above world corn. The outlook for US corn export demand is brightening.
- The midday GFS weather forecast is similarly dry across the Plains and slightly wetter across Illinois and Indiana in the coming 10 days. An above normal temperature pattern is forecast for the Central US with highs in the 70′s/80′s. The warmth will continue to speed the harvest with any concern cantered on the S Plains where dryness will be maintained.