- HEADLINES: Chicago extends overnight losses; Speedy harvest due in E Midwest.
- Global ag markets are weaker at midday. US and world grain futures are digesting the increasing movement of Ukrainian origin grains into Black Sea. There is also fear that France may miss out on Tuesday’s Algerian wheat tender amid talk that Russian fob wheat is buyable sub-$250. Russia’s interior cash market has fallen slightly from late June’s high and export margins are high despite a rising export tax. To the best of our knowledge, Russia’s minimum fob floor price for public tenders remains $260/mt, and so the result of Algeria’s wheat purchase this week is important. The EU grains market continues its probe for demand, and this has been a weight on US markets. Chicago soybeans are subject to pre-harvest supply pressure. Nov is targeting its 100-day moving average at $13.04, though we strongly doubt sub-$13.00 can be sustained for any length of time. Soy supply rationing is ultimately needed, and the cash market in the long run is a bull.
- Weekly export inspections in the week ending Sep 14 included 25 million bu of corn, unchanged from the previous week, 14 million bu of soybeans, also unchanged, and 14 million bu of wheat, vs. 15 million the previous week.
- For their respective crop years to date, the US has exported 50 million bu of corn, up 10% from last year, 28 million bu of soybeans, down 16%, and 188 million bu of wheat, down 29%. Weekly export disappearance is tepid amid record Brazilian corn loadings and as ship line-up data continues to feature decent soy tonnages. Combined US corn, wheat and soy inspections in the week ending Sep 14 were down 1 million bu from the same week a year ago.
- El Niño has become structural in nature as a moderate/strong event, which won’t reach its peak until December. Work suggests that only now is El Niño beginning to directly impact climate patterns. This bodes poorly for any meaningful pattern shift in Australia prior to mid/late October, and as mentioned this morning Brazilian weather will be watched more closely as October approaches. Zero rain is offered to Aussie growing areas over the next two weeks. Odds of extreme heat expanding into E Australia are rising. Assuming near-term forecasts, verify, cumulative rain in Mato Grosso Brazil in September will total only 0.80”, vs. 1.75” on average. Brazilian seeding dates are often debated in late Sep/early Oct, but our concern is that long-range Brazilian climate outlooks for month have called for a pattern of below normal precipitation in major producing areas during S America’s summer. The midday GFS weather forecast has extended dryness across Mato Grosso, Goias, Minas Gerais & Bahia into Oct 3.
- Spot crude is up $0.40 at $91.20/barrel. The Dow is up 100 points. The US dollar index has corrected from morning strength and was unable to find buying above last week’s high.
- The midday GFS weather forecast is consistent. Active showers blanket the Plains and western Midwest Fri-Sun as a slowing moving frontal system works across the spine of the Central US. Totals in excess of 2” will favour the Dakotas, MN, IA and WI, where it’s most needed to replenish moisture reserves. Warmth and dryness resumes beginning Mon/Tues, and beyond this weekend major disruptions to harvest efforts are unlikely. A yield trend should be known by the first week of October.
- Ukrainian stocks of corn and wheat are large, but whether sustained maritime shipments develop is highly uncertain. Otherwise, this is the wrong time of year to be bearish of ag markets. Abnormal heat/dryness in Brazil becomes more important if it continues beyond the next 10 days.