• HEADLINES: Chicago soyoil higher on demand; Additional US soybeans to unknown destinations; RGDS estimate soybean seeding up 1.5%.

• Chicago grain futures are higher in US pre-holiday trade with soyoil futures being the bullish stalwart. Corn/soybean futures are following with soyoil rising on strong domestic demand. US renewable diesel demand continues to build with this sector completely replacing lost US export demand. Gulf US soyoil stays well above S American and tropical oil offers from SE Asia, which has limited the rally in spot Chicago soyoil to $0.70-0.72.

• However, US soyoil values are becoming a demand driven bull as operating capacity is ramped up, with an upward price trend to persist into Q4. New US renewable diesel refineries are to come online in October/November which adds to the domestic demand outlook. The soyoil market is entering a new demand phase that must be closely monitored and how it plays into the price of soybeans. A firm Chicago close is expected today as values follow the early and late week rally with a midweek dip price trend.

• The US$ is steady following the US Labor Dept reporting a 186,000 increase in non-farm jobs for August. The report was seen as bullish for US equities as the US Central Bank is expected to hold rates steady in their September 19-20 meeting. The FMOC is controlling inflation and not producing a recession.

• The USDA announced that another 198,000 mt of US soybeans were sold to an unknown destination. China stays active in securing US soybeans for Oct-Dec.

• Chicago brokers report that managed money has bought a net 3,300 contracts of corn, 1,300 contracts of Chicago wheat, and 2,600 contracts of soybeans. Funds have sold 2,000 contracts of soymeal and bought 1,600 contracts of soyoil.

• RGDS reported that its soybean farmers planned to expand their 2023 soybean seedings 1.5% from last year. The gain was less than expected and followed Deral’s static soy planting estimate for Parana. Although Mato Grosso seeding looks to expand 2%, there is concern that poor margins will keep soy and first crop corn seeding expansion below current market expectations.

• We do not expect that this year’s drop in Mississippi river water levels will produce the same sharp rise in barge freight rates as the fall of 2022. A year ago, the US was actively shipping old crop corn/soybeans due to the Brazilian 2022 drought and their smaller harvest. This year’s US September export program is substantially reduced with a larger share of barges upriver. The point is that US Mississippi tariff rates will be rising, but the fear of a repeat of 2022’s excessive cost are overblown. Any raise in tariff rates will be borne by the US farmer in lower basis bids. The good news is that US farmers and commercials have an abundance of storage available for the 2023 corn and soybean harvest. Any impact on US corn/soy exports will be modest.

• The Plains/Midwest/Delta weather forecast is consistent with an extended period of little/no rainfall and above normal temperatures. High pressure ridging holds across the Central US into late next week with record heat forecast on the weekend and Monday (90’s to the lower 100’s). There is a chance of rain in the 7–10-day period across the N Plains/Upper Midwest with rainfall totals of 0.1-0.8” on 25% of the crop area. We would predict a decline of 2-3% in US corn/soybean good/excellent ratings on Tuesday.

• It is a new month and crop year, September 1 and 2023/24. The USDA/NASS crop report will be released in 11 calendar days with a slew of private crop estimates available next week. Debate rages in the industry as to US corn/soy yields with the recent hot/dry weather conditions causing a widening range of estimates. Also, S American, and Australian weather starts to play roles in world grain pricing as their new production season starts. China has been a record large buyer of world soybeans, corn, and barley. The industry is understating Chinese and world demand. We continue to argue that world wheat/feed prices are near seasonal lows.

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