- HEADLINES: Chicago sags on the onset of harvest amid slowing US export demand; China has now booked more than 50 cargoes of Argentine soybeans since Sept 1.
- Chicago futures are mixed at midday with soybeans firmer and the grains lower. November soybeans initially fell below its 100-day moving average before recovering via a rally in soymeal. December corn futures are getting close to support at $6.60-6.70 with key support in November soybeans at $14.00-14.20. The wheat market has formed a key reversal down today with some of the selling tied to the ending of the rail strike. Feedlots were securing trucks to transit HRW wheat if rail corn became unavailable. Thankfully, a rail strike is being averted and the risk premium built into wheat is being diminished. We look for a lower Chicago close based on the oncoming harvest and lack of strong US export demand. China remains active in securing Argentine soybeans.
- Macro financial markets are weaker as traders prepare for next week’s increase in US interest rates. Funds have sold 5,000 contracts of wheat and 3,700 contracts of corn and 2,300 contracts of soyoil. Funds have bought 3,400 contracts of soybeans and 2,300 contracts of soymeal.
- Argentine fob soyoil is priced at a cheap $14.50 cents under Chicago. Cash traders are hearing that several US multinationals may import Argentine soyoil into the US. The Argentine soyoil cannot be used for renewable diesel production as it does not qualify for the credit, but it can be used on other areas including US food production. The acute cheapness of Argentine soyoil and soymeal should provide a pause in US soy product rallies.
- NOPA reported a 165.5 million bu soybean crush rate, slightly less than the 166 that traders expected. Soyoil stocks dropped to 1.565 billion pounds, the smallest total since June of 2021 and down from 1.684 billion pounds last month. The NOPA data was seen as supportive of soyoil, but slightly bearish of soybeans. US processing margins stay strong which should encourage US crushers through the harvest.
- FAS/USDA export sales totals were larger than expected in soybeans at nearly 125 million bu, while corn/wheat sales were as expected. For their respective crop years to date, the US has sold 929 million bu of soybeans (up 110 million or 11% from last year), corn sales stand at 484 million bu (down 483 million or 50%, with US wheat sales at 376 million bu (down 7 million or 2%). The US corn export sales pace is troubling with their being no sign of Chinese interest. China has been absent from the world feedgrain market for weeks. Some point to their own potential record corn crop and feeding of broken rice in animal feed rations as the rationale for avoiding corn/sorghum imports. We note that China has secured more than 50 cargoes of Argentine soybeans into January since Sept 1.
- There was limited change in the GFS weather forecast with improving harvest conditions across the Central US. Showers will fall across the S and C Plains on Friday and the early weekend, but amounts will be less than evaporation with the harvest disruption being no longer than 1-2 days. There is no sign of a frost/freeze or a Gulf Hurricane into September 26. The time for cold weather damage is quickly passing for crops. The warm/dry open harvest weather bodes well for crop quality/yield.
- The grains are sagging on long liquidation. The 100-day moving average crosses at $14.51 in November soybeans, and a close below this support would be prove to be bearish. We hold a bearish short term Chicago view with initial downside price targets at $14.20-14.40 Nov soybeans and $6.60-6.70 Dec corn. KC wheat likely forged a short-term top overnight with a correction underway. Seasonal price trends are positive, but Russian fob wheat offers are expected to keep falling on their oversupply. US cash basis bids are strong and forward future’s offer no return to storage; farmers are advised to sell strong rallies as US export demand worry looms. The US$ will continue to push higher.