- HEADLINES: Chicago shrugs off energy price rise, bio crop values decline; Key Argentine election on October 22 with Blue Peso rate rising.
- The overnight Chicago grain rally did not carry through to the upside and follow the sharp rise in world energy prices. The bio crops of corn/soyoil have come under the most selling pressure at midday. Soyoil futures have fallen to fresh lows for this decline as corn has retreated 3-4 cents from like gains overnight. Soybeans are back testing last week’s low amid the ongoing Midwest harvest. The volume of Chicago trade is tepid as traders are taking risk off amid the uncertainty of 2 geopolitical war events and a USDA Crop report on Thursday. The mindset of traders is to get smaller, on risk, at least heading into the USDA report. Few are wanting to sell breaks or buy rallies until more is known about 2023 US corn/soybean yield potential. Of course, for farmers the declining Chicago price helps boost their revenue insurance payment that is calculated by the average October corn/soybean price.
- Chicago brokers estimate that managed money has sold 4,600 contracts of soybeans and 5,100 contracts of corn, while buying 2,900 contracts of wheat. In the soy products, funds have sold 3,200 contracts of soyoil and bought 1,800 contracts of soymeal. The charts are staying bearish on soybeans, soy products and wheat. Corn charts are more neutral and basing.
- The US Government is celebrating the Columbus Day holiday and is closed. No daily export sales, weekly export inspections or US Crop Progress/Condition reports will be released today. The US government is back in business on Tuesday and today’s reports will be released then.
- The seasonal soybean buy date is Columbus Day as the US soy harvest pushes beyond 50%. The second week of October has historically been the seasonal low for soy futures. Whether or not this works again this year depends on the USDA report on Thursday and forward Chinese demand for US soybeans. China is back from holiday and watching Chicago weaken without any large US purchases.
- Brazil will be on holiday Thursday with Argentina holding a key presidential election on October 22. The Blue Peso has reached 900:1 as the fear grows that Javier Milei will be elected with his campaign stance to dollarize the Argentine economy to control inflation. There are 130 Congressional seats at risk out of 257 in the election. Historically, the Argentine Congress follows the President in its economic platform. Note that a runoff election is possible if one candidate does not control 50% of the Presidential vote. Tensions are high in Argentina amid the ongoing drought, the financial pressure from the IMF to pay off their debts and the National Election.
- The Kazakhstan wheat crop is estimated at 12.3 million mt, down 25% from last year due to harsh growing weather according EU’s crop forecasting arm MARS. The smaller crop has a big impact on durum with Canada also facing smaller trade.
- The midday GFS weather forecast is slightly further north with showers/storms that start on Wednesday and continue into the weekend. The rain falls across the northern half of Nebraska and eastward into N Illinois/Michigan. Rain totals range from 0.5-2.00” with locally heavier amounts. The remainder of the southern US stays arid with warming temperatures during the weekend. Note that the Great Plains stays dry which is worrisome with soil moisture short and HRW wheat seed trying to germinate. The 10–15-day period is warmer with the Central US weather turning wetter under a trough.
- Surging energy prices have not provided support for Chicago corn/soy futures amid the ongoing harvest and Thursday’s USDA Crop report. Yield data has been variable but is showing improvement in corn/soy. A 61.8% retracement for spot Chicago soyoil futures is $55.35, which the deliverable October futures contract is nearing. Cash soyoil is trading 5-6 cents above October and there have not been any deliveries. The demand pull of renewable diesel continues and shows no sign of slowing when measured by D4 RIN production. S American weather is abnormal with rain needed across Argentina/N Brazil. We now need to get through Thursday’s USDA report.