- Corn/wheat push Above 50-day moving average, produce chart market “melt-up”; China booked 6-8 cargoes of US soybeans; GFS weather forecast dry for the Central US next 10 days.
- Grains rally on morning reopening amid US corn/soybean yield questions and unwind of long stock/short commodity spread by hedge funds. December corn futures pushed above its 50-day moving average at $4.0775. Soyoil bounces as canola futures edge off limit losses and Canadian farmers fret over the loss of China as key import customer. The Canada/China canola row provides political pressure on Prime Minster Trudeau ahead of 2025 election. A higher Chicago close is expected due to the expectation of falling crop condition ratings.
- Midday Chicago grain futures are higher with wheat/corn pacing the advance. December corn futures rallied to $4.10 while December wheat futures to $4.66 on speculative short covering. The 50-day moving average was breached at $4.0775 in December corn and is being tested at $5.66 in December Chicago wheat. Dry Central US weather and the start of a new Southern Hemisphere growing season are offering Chicago support. The soybean rally has been constrained by the acute weakness of Chicago soyoil tied to the sharp fall of Canadian canola futures. Soymeal has been the upside product leader on strong cash premiums and talk of additional US export demand. US producer selling is limited with farmers not willing to sell new crop harvest amid the uncertainty of yield. The market has “technically” melted up in rather active volume.
- The USDA/FAS reported the sale of 132,000 mt of soybeans to China in 2024/25 crop year. Rumours are that China purchased another 6-9 cargoes of US soybeans on the overnight break. China remains active as a US soybean buyer.
- Chicago brokers report that the managed money has purchased 8,200 contracts of Chicago wheat, 10,400 contracts of corn, and 9,700 contracts of soybeans. In the soy products, funds have sold 4,300 contracts of soyoil and bought 7,100 contracts of soymeal. Active spreading of meal/oil has been reported.
- For the week ending August 30 the US exported 38.0 million bu of corn, 18.3 million bu of soybeans, and 21.3 million bu of wheat. For their respective crop years to date, the US has shipped out 2,048 million bu of corn, 1,642 million bu of soybeans and 210.8 million bu of wheat. Adding back 247 million bu on additional census corn exports (through June) takes the US 2023/24 corn export total above 2,300 million bu. USDA is 50 million bu too low with old crop corn exports at 2,250 million. And in soybeans, 72 million bu needs to be added back for Census which jumps 2023/24 US soybean exports to 1,715 million bu. WASDE is 15 million bu light on old US soybean exports. It is too early in the 2024/25 wheat export year to make any conclusions.
- US Presidential candidate Trump made China weekend comments that indicated that he and President Xi would manage to have a good relationship. Trump continued that US tariffs are not taxes on Americans but are paid for by other countries. However, as seen by Canadian farmers overnight, retaliation can often be swift and unexpected. China will not favour rising US goods tariffs.
- The midday GFS weather forecast is like the overnight solution. The GFS model is dry in the 10-day period for the entire Central US with any rain confined to the Northern Lakes and the Gulf States. A few showers may occur across MI/OH/PA but totals would range from 0.1-0.6”. The best rain falls across the Gulf states from afternoon convective thunder-storm activity. Ours confidence in the GFS forecast is average due to the potential formation of tropical storms. An extended dry period is forecast across the Central US.
- Chicago is “melting up” on the charts as key moving averages are breached and the bears reduce risk ahead of the USDA September 12 crop report. Yet, we doubt that coming private crop estimates will veer too far from their August forecasts. Soybean seed size is in decline and could cause a bigger yield fall in October, but NASS will not catch soybean seed size drop in its September forecast. The sharp fall in US crude oil prices offers worry over world economic growth. The US is unlikely to run out of US soybeans without a dire S American weather problem from November into 2025.