- We have seen a mixed start to the week in Chicago (closed yesterday for Labor Day holiday) with the soybean complex higher and grains a touch weaker at midday (which remains the position into the close). It was soybeans that first caught a bid on news of better than expected export shipments and forecast soaking rain across much of the Midwest this week. It is the grains that are lacking excitement – for now! Next Monday sees the next USDA report and it could be that if record corn yield is confirmed we could well see the season low formed and trade move on from there; we will have to wait until Monday for that one!
- The US soybean export numbers (see above) were once again impressive with 45.3 million bu of beans shipped (to week ending 1 September) vs. A mere 3.0 million bu last year. 38 million were scheduled for shipment in the 2015/16 crop year, which should see final US exports at, or close to 1,940 million bu. This is some 60 million above the USDA’s August figure, and if reflected next week, should see end stocks decline by a similar amount to 195 million bu. This, in turn, will place pressure on new crop yield unless we are to see new crop end stocks below 300 million bu.
- In corn the position is similar, but to a much lesser degree with final exports potentially 15 million bu above the USDA’s August level. This is less of an issue than is the case with soybeans but could also see season lows confirmed.
- CONAB further lowered its estimate of total Brazilian 2015/16 corn production to 67 million mt vs. the USDA’s 68.5, and so Brazilian corn production continues to inch closer to domestic consumption forecasts. We note that Brazil’s ship lineup is in retreat, a majority of Brazilian corn export sales should be finished by late September or early October, and we maintain that Brazil’s exportable surplus will be closer to 16 million mt than the USDA’s 17.5 million. CONAB’s soybean production forecast was left unchanged at 95.4 million mt vs. the USDA’s 96.5 million. Brazilian soybean exports are now struggling amid a lack of offers.
- The US$ was sharply lower, reported to be on account of disappointing non-manufacturing economic growth figures in August leaving the US$ below last week’s low, which adds to upside price pressure.
- Overall, the bears continue to cite record yields and rising private soybean production estimates whilst the bulls cite the US’s newfound status in world markets (much more competitive) as well as record export potential. The outcome will doubtless be clear in the next three to four months but, for now, it is too tight to call either way although we would not wish to be short at current price levels.