- The morning has been mixed in Chicago with soybeans trading either side of unchanged, while the grains (corn and wheat) are slightly lower. The volume of trade has been modest with most fund managers waiting for Thursday’s USDA report before adding to their positions. Funds are looking at using any post report break to make new purchases as grains and soybeans are seen as cheap with S American weather worries likely to expand and worsen into November.
- US weekly export inspections included; 30.8 million bu of corn, 32.9 million bu of soybeans, and 25.4 million bu of wheat. The wheat total was above expectations while corn and soybeans were in line with trade expectations. For their respective crop years to date, the US has shipped 364 million bu of wheat (down 8 million or 2% from last year. US soybean exports for the crop year stand at 146 million bu, 21 million or 16.6% above last year. US soybean exports for September are likely to be record large. US corn exports from September 1 stand at a not so good 115 million bu or down 111 million from last year or down 49%. Brazil and Argentine continue to export record totals of corn which is cutting into the US corn export share. We note that the recent rains across the NW Midwest are expected to help refill the Mississippi River and lower barge freight rates. This should help firm basis bids along waterways and in the interior.
- Brazilian wheat millers are showing concern about their wheat crop amid all of the rain that has fallen across S Brazil (and a likely sharp reduction in crop quality). The Argentine wheat crop is also suffering from excessive water which is likely to impact its quality. The Argy wheat harvest is still a few weeks off, but already, talk is emerging that Brazil will be forced to take US HRW wheat since Russian wheat has not been approved for import. The next 2-3 weeks will be key for the 2017 Brazilian wheat crop, and whether Argentine wheat can supply Brazil with 12% plus wheat. Black Sea sources report that port capacity to load out wheat in key Russian export terminals is now fully booked through to mid December, which is one reason why Black Sea wheat/barley prices are firming. Russian corn will also be available for export by mid November. The logistical pressures are growing!
- In summary, US interior cash basis levels should improve as producers are not willing cash sellers. Fund managers are hoping for an October post report break to get long. S American weather is concerning for wheat and early soybean seeding. Our concern is that dry N Brazilian weather will persist into November. The funds have liquidated most of their long soyoil/short meal spread, so a US yield above 51 bushels/acre is needed to forge a lasting price decline. CONAB is out with Brazilian 2018 crop estimates on Tuesday morning.