- HEADLINES: Chicago futures mixed with grain/soy spreading featured; GFS weather forecast at midday offers new tropical depression; Brazilian exports soar, US shipments lag.
- Chicago grain futures have rebounded with the grains higher with the soy market staying in the red. The volume of Chicago trade has been modest with end user support noted in wheat/corn on the early break. With no quick solution to the Black Sea Grain corridor stalemate, Chicago grain futures are back to focusing on supply. Soybeans are lower on the hope that the Argentine soy/dollar program will produce renewed farmer selling.
- Initial and early Midwest corn yields are coming in below last year and producer expectations. Small kernel size is being blamed for the poor yields. It is far too early to determine a US corn yield trend, but traders will be keeping a close ear on the ground relative to producer yield reports. We look for a higher Chicago close ahead of weekly good/excellent corn/soybean crop ratings that are expected to be down sharply this afternoon.
- World wheat/soybean trade demand is record large, but it is being fulfilled almost exclusively by Russia in wheat and Brazil on corn/soybeans. The demand is so strong that Brazil’s waiting time to load a vessel has now reached 48 days, the most in a decade, which is causing huge demurrage costs for importers. The massive Russian and Brazilian export programs have left the EU/US seeking export scraps. The difficult question is the timing of when world demand will switch back to EU wheat and US corn.
- Chicago brokers report that managed money has bought a net 2,300 contracts of corn and 1,200 contracts of Chicago wheat, with selling of 3,100 contracts of soybeans. In soy products, fund managers have sold 2,300 contracts of soyoil and 1,900 contracts of soymeal.
- S&P Global estimated the US corn yield at 177.5 bushels/acre and soybeans at 51.0 bushels/acre for the September report. They also added an additional 500,000 acres due to the FSA Farm Program participation data of August. S&P noted that they held a negative bias on the US soybean yield going forward due to poor late finishing weather. We would note that the S&P corn yield would be record large.
- US export inspections for the week ending August 31 were; 18.9 million bu of corn, 13.9 million bu of soybeans, and 11.0 million bu of wheat. For their respective crop years to date, the US has exported 159 million bu of wheat (down 49 million or 23%), 1,466 million bu of corn (down 700 million or 32%), and 1,919 million bu of soybeans (down 174 million or 8%). WASDE is likely 10-15 million bu too low on US 2022/23 US soybean exports.
- Brazilian state agencies are forecasting sharp falls in new crop corn production with IMEA (Mato Grosso) forecasting 2024 corn production at 43.3 million mt, compared with 52.5 million this crop year.
- Negative margins have Brazilian farmers pulling back from seeding expansion in both winter corn and first crop soybeans. The drop in Brazilian new crop corn seeding intentions is important to longer term Chicago valuations.
- The Plains/Midwest/Delta weather forecast is consistent with recent day forecasts with a below normal rainfall trend and moderating temperatures. High pressure ridging holds across the Central US today and then retrogrades southeast with a diminished amplitude into next weekend. This allows showers on the weekend across TN, KY, and SE MO, and then next week across the Upper Lake States. The remainder of the Central US holds in an arid trend. A new tropical depression has formed in the Atlantic Basin which could target the Eastern US shoreline as a hurricane around September 15. Until then, moderating temperatures and below normal Central US rainfall are the features.
- Chicago values are waiting for next week’s USDA Sept 12 Crop Report. Grain/soy spreads are being unwound. Cash basis bids are starting to strengthen ahead of the onset of active corn harvest in 7-14 days. US renewable diesel demand stays strong with the soy correction temporary. Support is noted below $13.50 Nov soybean futures. Seasonal lows are being formed.