- Chicago grain markets have traded firm through midday, supported by higher energy prices and a decline in the US Dollar Index. Soybeans have been the leader in the Chicago grain markets on Tuesday and are holding onto gains of 12-15 cents at midday. Corn has followed, and 5-7 cents higher, while Chicago wheat has corrected 7-9 cents. The next few days will be technically important for the wheat market as December wheat has converged with the 100- and 200-day moving averages. A close above $9.50 will spark another round of technical buying, and a close under $9 will likely trigger fund liquidation. Equally important is that December corn holds $6.70.
- The US Dollar Index continues to correct and has now shed more than 3.7% in the last four days. Crude oil futures are firming this week with November now nearly $11 over the lows in just 6 sessions, and on track to mark the highest close in nearly 3 weeks as OPEC considers production cuts.
- US stock market indexes are soaring with the S&P 500 Index gaining nearly 60 points (1.6%) overnight and has traded more than 100 points higher at midday. The JOLTS survey showed that job openings in the US declined to 10.05 million in August versus expectations of 11.2 million jobs and 11.17 million in July. The 10% decline from July was the largest 1-month decline since 2009 (ex-covid), and offers evidence that the Fed’s interest rate hikes are taking hold.
- Chicago brokers estimate that funds have bought 1,000-2,000 contracts of wheat, 5,000-7,000 contracts of corn, and 5,000-7,000 contracts of soybeans. In the soy product markets, funds have bought 1,000-2,000 contracts of soybean meal and 3,000-5,000 contracts of soybean oil.
- Longer term, the advancing Brazilian crops will be highly competitive with the US market for world exports. On Monday CONAB reported that Brazil had planted 23% of its first corn crop compared to 24% last year. The first crop is typically used to satisfy domestic demand, and any residual is exported.
- Soybean planting progress was reported at 4.6% complete on a national basis compared to 3.9% last year. Mato Grosso had planted 8.9% of its soybean crop versus 6.2% last year. Planting progress in Parana was at 9% versus 7% a year ago and Mato Grosso do Sul had planted 6% of its crop versus 6.9% last year. S American weather will take on increased importance in the coming weeks as planting progress advances and crops emerge.
- The midday GFS weather model run is little changed from the overnight. The key crop-growing regions of the Central Midwest and Western Plains states will stay dry in the week ahead with light rains to move into the region in the last half of next week. Above-average temperatures are forecast across most of the Corn Belt for the next week. The open harvest window will see corn and soybean harvest advance quickly across the country. However, the lack of rain will worsen the transport problems on the US river systems.
- The advancing harvest is keeping pressure on US cash markets, which will remain under pressure until harvest at least reaches 50% complete. Basis will then likely strengthen into the end of the year. C IL on-farm storage is showing more than $1/bu return for corn and $0.70 for soybeans from harvest to December delivery.