- US wheat follows Paris weakness; Mississippi river level in seasonal decline; Weekly US ethanol production record large for August.
- Chicago markets are choppy and dull at midday. Pro Farmer Tour results have failed to produce any strong bullish or bearish argument on US yield potential while US wheat futures are falling in tandem with Paris losses due to the rising €uro and tepid export demand. EU fob wheat offers are holding at a strong premium to other regional suppliers due to poor quality, a smaller harvest, and stable domestic demand. Paris wheat is an export related contract, so heading into first notice day, liquidation occurs amid seasonally slow French demand.
- Wheat has been a drag on corn/soybeans which pulled values off their early session highs. China secured additional US soybeans in a daily USDA announcement, while the US ethanol grind was the ninth largest for any week on record. The August US corn grind for ethanol could reach a record 477 million bu. The strong corn ethanol usage along with the US’s competitive export position is building record large US corn demand, low prices are doing their job. The difficult question ahead is how big is big in terms of the 2024 US corn yield. This question is capping rallies. Chicago is currently trading a US corn yield of 183-184 bushels/acre, slightly above the NASS August estimate. The strong US corn demand profile should produce an early seasonal harvest low in the days/weeks just ahead.
- In what seems to be becoming an annual event, water levels on the Mississippi River are seasonally crashing due to the late July/August dryness across the Delta and Ohio Valley. The Mississippi River Memphis TN gauge has reached .23 ft below sea level this morning. And based on the arid forecast, it is expected to decline even further. This is raising barge freight costs as smaller drafts will be required. FOB Gulf soybean basis has rallied to $0.88/bu over from $.84/bu on Monday. We do not see this as having much impact on US soy trade from NOLA, but it is something to pay attention to as the 2024 Delta harvest is underway.
- The USDA reported that 253,000 mt of US soybeans was sold to China and an unknown destination. We believe that China secured as many as 8-10 cargoes of US soybeans yesterday and is still asking for November/December offers.
- Turkey has continued to import an estimated 350,000 mt of mostly Russian wheat that has not been custom cleared on the prospect of selling at elevated prices once the import ban is lifted. Turkish millers have financially suffered in using higher priced domestic wheat for flour production and exporting flour into N Africa/Mideast at prevailing world rates since June. Rumours abound on whether Turkey will lift the import ban in October or extend it into December. The reopening decision is said not to have been made yet.
- Chicago price ranges in corn/soybeans are narrowing with Dec corn unable to rise above the 20-day moving average at $4.02. The wheat price break is via the offload of September spec positions in Paris with first notice day looming and a French export program lacking. The weaker US dollar has increased the interest from hedge funds for commodities, but they will await chart signals before acting. It is the wrong time of the year for a “V” bottom in grain.