- Soybeans were back and forth, in uneventful trade on Tuesday and 1-2 cents lower at the close. Soymeal continued to trade in a broad range, while soyoil marked the first higher close out of the last nine trading days. The soybean harvest is advancing well, though high freight costs are keeping cash basis levels under pressure. However, barge rates for Nov/Dec are significantly cheaper, suggesting that spot basis should stabilise by mid-month. Seasonally, Chicago soybean futures tend to bottom in early October.
- Dec corn fell another 2 cents, and is again stuck between its seasonal low and its 20-day moving average. Grain transportation issues have wreaked havoc on interior cash basis levels, but this will be a short term phenomenon, particularly as better rainfall lies ahead, and doesn’t change annual corn supply and demand. Black Sea feed wheat prices are down slightly ($.50/mt, $.01/bu), but maintains a hefty premium to US and S American corn offers. We doubt that Black Sea grain highs are in, but rather that market has taken a pause following a six week long rally. Fresh market-driving input remains lacking, though we would mention that funds are expanding their net short position, which this evening is estimated at 141,000 contracts, vs. 133,000 last Tuesday.
- US and European futures wheat settled modestly higher today, driven in part by validation of the recent rally in Black Sea fob quotes. Egypt secured three cargoes of Russian wheat, which was not a surprise, but the tender was executed at an average fob price of $199/mt, vs. $197 two weeks ago, and Russia continues to find record export demand. Russian offers today are fractionally lower, EU prices are slightly higher, and generally high quality milling wheat is offered from the US, Europe and Black Sea in a range of $194-200/mt, a rather narrow range compared to recent weeks. Seasonal trends in Europe and Russia still point upwards, and so any further break in Kansas/Chicago will find at least some incremental export interest. We maintain that seasonal lows were scored in August, and with funds still holding a sizeable net short in Chicago (70,000 contracts), this potentially supports our view.