- Soybeans were higher overnight and lightly mixed around unchanged at the close, with November soybeans once again stopping at the contract’s 200 day moving average. Trade news was supportive, with export inspections above expectations and up 22 million bu from last week at 55 million, while the USDA announced sales of nearly 5 million bu to Chinese buyers. Soyoil followed palm oil prices down as monthly Malaysian palm oil stocks were reported at a 19 month high of 2 million mtMTs. After the close, NASS reported that 36% of the US soybean crop had been harvested as of Sunday. The weekly total was slightly behind expectations, and still lagging the 5 year average by 7%. Light rains across the Midwest are forecast ease on Wednesday, though the forecast shows storms returning over the weekend. However, we expect the US harvest to reach 50% complete by mid-month. Wednesday’s trade will feature final positioning ahead of the October crop report. Seasonal trends are bullish for both Chicago and basis values into the end of the year, and we are positive on any post report price break.
- December corn ended fractionally lower, and traded in a range of just a 1.75 cents on Tuesday which is dull even compared to recent weeks. There is little incentive to establish any new large position ahead of the USDA’s WASDE, in which the trade expects a slight boost in yield. We estimate that managed funds are already short a net 152,000 contracts this evening, vs. 143,000 last Tuesday, and vs. 130,000 on this week in 2016. Notice that December corn’s chart-based support and resistance continues to narrow, and now rests between $3.45 and $3.51. A weekly settlement above or below this would seemingly attract the next move. Our opinion is that support will hold as S American weather to date has been far from ideal, and as there is no sign that of an imminent collapse in cash milling and feed wheat prices. Crop progress continues to lag, with maturity over the weekend reaching 82%, vs. 92% a year ago, and with harvest just 22% complete, vs. 37% on average this week. Ongoing sideways trading is expected, but a close eye will be kept on S American weather. Brazilian farmers, via lower first-crop seeding, appear to be betting on an extended wet season next spring.
- Wheat futures, like corn, are unwilling to move ahead of Thursday’s USDA report. Fresh input today is neutral, though we do mention funds have added roughly 10,000 contracts to their net short position since last Tuesday. The spec community as a whole is leaning a bit bearish heading into the October reports. Winter wheat planting as of Sunday reached 48% complete nationwide, vs. 58% on average. Delays are most noticeable across the S and C Plains, where too much rain has fallen (150-600% of normal in the last 14 days), and seeding in KS is just 27% complete, half of what it is normally in early October. This is also the lowest on record. How this affects final wheat acreage is unknown, but certainly cash prices are offering little incentive to boost area. Egypt secured 170,000 mt of Russian wheat for late November delivery. Egypt paid an average price of $199/mt, basis fob, unchanged from last week. Along with stable interior prices in S Russia, downside risk in the world cash market appears to be limited to $1- 3/mt.