- HEADLINES: GASC wheat tender results awaited; Crowded Chicago spreads get liquidated; GFS midday weather run is drier for E Midwest.
- Chicago grain futures are higher with soybeans weaker at midday. Spread unwinding of long soy vs short grain and long oil vs short meal have been featured this morning. The long soy vs short grain was a popular spread heading into the September USDA Crop report due to late growing season dryness. The volume of trade remains curtailed due to recent choppiness and the uncertainty surrounding summer row crop yield. Midwest corn yields are variable while early soybean yields are disappointing and below last year. However, it is too early in Midwest soybean harvesting to call a yield trend. Thus, the market is lacking fresh fundamental inspiration. This allows chart patterns to have an overweight influence on price. We look for a mixed Chicago close with the market’s focus shifting over to the Sept 29 Stocks and Final Grain Report.
- The US Central Bank will announce their September FOMC meeting policy today. No change in rates is expected.
- Chicago brokers reflect that money managers have bought 2,600 contracts of Chicago wheat and 3,200 contracts of corn, while selling 2,100 contracts of soybeans. In the products, funds have sold 5,100 soyoil and bought 3,200 soymeal.
- Egypt’s GASC received offers from 17 sellers offering a combination of European and Russian wheat. The GASC tender was payment on sight for November. The cheapest offer to GASC was for Bulgarian fob wheat at $258.77/mt ex Varna with French and Romanian fob wheat offered between $264-270/mt. All Russian fob offers were at $270/mt depending on the Russian port of origination. Freight was offered at $19.68-22.56 on Russian wheat for a CIF price of 289.68-292.56. The French freight was $24/mt while the Romanian and Bulgarian freight was $16.09-18.80/mt making their landed price the cheapest.
- If GASC buys wheat it will be a combination of Bulgarian/Romanian/French. Rumours have the tender being cancelled. Egypt’s GASC swapped out 500,000 mt of Russian wheat to Bulgaria/Romania in recent days after Moscow blocked the sale due to the contract being below their established fob floor price of $270/mt as we reported a while back. We note that Moscow has been inconsistent on the $270/mt floor wheat floor price, and there are rumours it will be raised to $275/mt in October.
- The USDA announced that 120,000 mt of US soybeans was sold to China in 2023/24.
- US weekly ethanol production was up 9% on last year which produced 288 million gallons of ethanol with US ethanol stocks down 4% from last year at 910 million gallons. US gasoline consumption was up 1% on last year at 8.41 billion barrels/day. US crude oil stocks were down 3% from last year.
- The midday GFS weather forecast maintains an active upper air flow pattern across the Central US with rain chances starting tomorrow across IL. Showers blanket the Plains and Western Midwest on the weekend with rain totals of 0.5-1.50” Totals more than 2.00” totals favour the Dakotas, MN, IA, and WI through early next week. The storm pushes east into the E Midwest mid next week with a new system for the W Midwest late next week. Midwest high temperatures hold the 70’s/80’s into October.
- Chicago markets are all about managed money flow. The flow has been to exit long soyoil and oil share spreads, while modestly cover short grain positions. US farmers are being tight fisted with their newly harvested corn and putting it into storage. The Midwest soy harvest will get going in earnest next week. Cash basis bids are improving amid strong margins for US soy crushers and ethanol producers. The politics of Black Sea grain are confusing with Moscow wanting a wheat sale’s floor of $270/mt basis FOB while Ukraine argues with Eastern European neighbours. Seasonal lows are forming but these lows take time to confirm.