- Chicago holds onto gains at midday; Brazilian Real slides near record low vs USD; US soybean weekly exports nearing their seasonal high.
- Midday Chicago corn, soybeans, and wheat futures are slightly higher with corn the upside leader on additional US/FAS daily export sales. Short covering is the week’s early feature, but the market is running into cash corn sales from Midwest farmers as December futures reach near their upside targets at $4.12-4.14. On a per acre basis, farmers are seeing incredible yields and even at $4.12 December corn, gross per acre calculations are coming in at or above producer budgeting from earlier in the spring. Amid tight storage, farmers are willing to sell corn with 20-50% of their harvest yet to be completed. The fast harvest pace and large yields are providing strain to US logistics and storage across most of the Midwest. Corn piles are starting and growing, something that has not been seen in recent years.
- Soybean and wheat futures are rising on short covering amid a general bounce in a host of commodity markets related to the cut in China’s lending rate. It will take a long time to measure whether China’s 0.25% reduction in its lending rate will boost consumer confidence/demand. But the nearby impact of the rate cut should be digested by commodity markets by no later than Tuesday.
- Chicago brokers estimate that the managed money has bought 3,600 contracts of Chicago wheat, 5,900 contracts of corn, and 4,100 contracts of soybeans. Managed money has bought 2,300 contracts of soyoil and 1,900 contracts of soymeal.
- FAS/USDA reported the sale of 169,926 mt of US corn to Mexico and 130,000 mt of US corn to S Korea for 2024/25. And 198,192 mt of US corn was sold to an unknown destination, rumoured to be Mexico. There were 116,000 mt of US soybeans sold to unknown destinations, rumoured to be the EU, and 264,000 mt of US soybeans received in the reporting period for delivery to unknown destinations that are rumoured to be China.
- FGIS weekly export inspections for the week ending October 17 were 39.4 million bu of corn, 89.4 million bu of soybeans, and 9.9 million bu of US wheat. For their respective crop years to date, the US has exported 228 million bu of corn (up 53.3 million or 31%), 290 million bu of soybeans (down 8 million or 1%), and 340 million bu of wheat (up 86 million or 34%). The US export pace is in line with corn/wheat WASDE forecasts, but falling behind last year on soybeans is a concern. We maintain that WASDE is 75-125 million bu too high in its US 2024/25 soybean export forecast due to slowness by China.
- The Brazilian Real is weakening to historical lows today which provides a currency advantage for Brazilian farmers. The Real is priced at 5.71:1 USD or near a record low. The Brazilian Central Bank is expected to raise their lending rate by 1% on Friday to stem worsening inflation. The fall in value of the Brazilian Real boosts Brazilian farm profitability with soybean seeding area expansion at 3% now assured. A rise to 5.8-5.9 in the Real vs the US dollar would keep Brazilian farmers profitable on both corn and soybean seeding/production. The Brazilian government’s growing deficit is bearish of Chicago prices as grain production continues to expand.
- A favourable mixture of rain/ sunshine prevails across Brazil/Argentina for the next 10 days. Northern Brazil will see daily showers of 0.25-1.25” to restore soil moisture. EC Brazil is favoured with any heavier rainfall and low-level flooding. Brazilian high temperatures will range from the 80’s to the low 90’s. The Argentine forecast is also favourable with rain to return mid-week with totals of 0.5-3.00” followed by 5-7 days of dry weather before new shower chances. No extreme heat is forecast with highs in the 70’s to the upper 80’s.
- Chicago should score a weekly high by early Tuesday on short covering with farmer selling to increasingly pressure corn. S American weather forecasts are favourable which caps Nov soybeans above $9.90. And needed rain is falling across the Plains to germinate HRW wheat. Russia will export a record large 5.5 million mt of wheat during October. We doubt that wheat futures can sustain much of a rally.