- Following lower trade overnight, selling continued in the soy markets through Monday. The soymeal market paced last week’s late rally, and also led the way lower on Monday’s correction. Early week news was limited to export inspections that were at expectations, but still above a year ago at 38 million bu. After the close NASS reported national harvest progress had advanced to 10% complete through Sunday vs. the 5 year average of 12%. The Delta states are all well ahead of normal with LA at 75%, MS at 50%, and AR at 35%. Harvest across the Cornbelt states is just getting underway, and generally in line with average. The hot/dry weather in the last week has advance crop maturity, and harvest will accelerate into October. Near term support was established last week under $9.60 and resistance this week above $9.80, which looks to contain the soybean market into Friday’s quarterly Grain Stocks report. Old crop stocks are already expected well over a year ago, and it will be the October Crop Report yield that will have “significance”.
- Corn futures ended marginally higher, as both the bulls and bears lack leverage. Crude hit new 5-month highs. Next week’s arrival of moisture in Brazil will more directly impact Brazil’s soybean balance sheet, while NASS’s Stocks report on Friday won’t include any statistical fireworks for corn. Overall, the market lacks direction, and will likely trade sideways until more is known about S American weather patterns in November/December. The US corn harvest through Sunday reached 11%, vs. 14% last year and 17% on average. Maturity continues to lag year-ago levels, particularly across the N Plains & Upper Midwest, maturity is some 18-25% behind normal in SD, ND, MN and WI. Key USDA data lies ahead, but more important than US balance sheet changes in the next three weeks is strength in other feed grain markets. A range of $3.30-3.80 December is projected through early winter without major surprises in combine yield data in the next few weeks.
- Wheat futures at all US exchanges ended higher, led by spring wheat in Minneapolis ahead of NASS’s Small Grains Summary on Friday. We also note how drought in the C and E Midwest has yet to be solved, and in fact looks to worsen over the next 10 days, and there is concern about early SRW establishment. US winter wheat planting through the week ending Sunday reached 24%, vs. 28% last year. Unlike corn, a supply-driven story is developing in wheat, one that looks to further shuffle the world trade matrix. The Australian forecast has again trended drier in NSW and Queensland, and this week we have opted to reduce our estimate of Australia’s 2017/18 crop to 18 million mt. Compared to last year, this suggests that some 9-10 million mt of demand will shift from Australia to other origins, which amid current price relationships look to favuor US HRW longer term. Russian fob offers are up another $1/Mmt to $191/mt, a 6-week high, and we look for a test of $196-198/mt in Russia by December. This in turn suggests a seasonal top in December Kansas/Chicago futures at $4.75- 4.90.