- HEADLINES: Chicago mixed at midday as Egypt secures Russian wheat in private deal; CONAB estimates Brazilian soybeans at 162 million mt, corn at 119.4 million mt; GFS weather forecast at midday consistent.
- Chicago futures are mixed at midday with soybeans/soymeal higher while corn/wheat and soyoil trade in the red. Soyoil futures have been pushed to sharp losses on the ongoing oil share unwind. December soyoil is back to testing $0.50-0.52 cent chart support, a level where the rally started back in June. Corn, wheat, and soybean futures appear to be trading in a broad range awaiting USDA October Crop report and US corn/soybean yield data. Traders have been raising their yield estimates as recent producer reporting has yields improving. The only worry is the S Midwest Group 3 soybeans which were impacted by late season heat/dryness. The volume of trade has been modest everywhere in Chicago except soyoil where 65,000 contracts have already changed hands basis December. It is soyoil where long liquidation is active and ongoing.
- Chicago brokers estimate that managed money has sold 3,300 contracts of corn and 4,900 contracts of wheat, while buying 4,100 contracts of soybeans. In the soy products, funds have sold 6,700 contracts of soyoil and bought 2,900 soymeal.
- Brazil’s CONAB estimated their 2024 harvest at 162 million mt of soybeans and 119.4 million mt of corn. The soybean crop would be record large and 6 million above 2022/23 while corn is down 17.5 million mt vs. the USDA crop of last year.
- The media is reporting that Egypt’s GASC secured 480,000 MTmts of Russian wheat for November/December shipment with payment under a 270-day letter of credit. The price is said to be $265/mt basis fob. No confirmation was offered by GASC, but the sale is being widely discussed by European traders. The sale was private with Russian sources late last week discussing that both parties were in negotiations. The Russian Government must have given approval for the sale at the $5/mt discount that had been routinely discussed this autumn at $270/mt as a floor price.
- The US exported 21.7 million bu of corn, 14.5 million bu of wheat and 60.4 million bu of soybeans for the week ending October 5. The weekly US soybean exports were the largest since February 9. For their respective crop years to date the US has shipped out 128 million bu of corn (up 18 million from last year), 133.5 million bu of soybeans (up 31 million from last year), and 238 million bu of wheat (down 97 million from last year). The US wheat export pace is disappointing.
- We are confused by the soyoil futures decline. Soyoil futures are dropping just as new renewable diesel capacity comes online and US soyoil supplies tighten. The bears argue that D4/D6 RIN values are falling with losses of 9-11 cents this morning with more than a 50% drop since Sept 1. The pressure on D4/D6 RINs is due to their excessive supply and the expansive production of Renewable Diesel across the US. We expect that RIN values will continue to stay at low levels amid the sheer supply that is produced each day. RD producers do not see RINs as key to their current and future production. That was in the days of biodiesel. Weak RIN values imply sizeable RD production.
- We see the drop in soyoil values as a bear trap that will only be realised following Thursday’s USDA October Crop Report. The demand for US soyoil grows sharply into Q1 as sizeable new production comes online. Large amounts of D4 RIN production and lower values are not bearish to soyoil demand.
- The midday GF S weather forecast is slightly further north with showers/storms that starts today 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 starting mid next week. The C Plains holds in a below normal rainfall pattern.
- May-September US rainfall was 2.98” below average, the twelfth driest on record and the driest since 2012. September has been noticeably dry for 4 years running. This should have the biggest impact on US soy yield. It is too early for S American weather to have any impact on summer row crop yield, but that will change in the coming weeks. China has been a massive buyer of Brazilian corn since July.