• HEADLINES: Soybeans turn down on fund liquidation; Chicago corn futures lower after yesterday’s one-month high; Wheat futures lower after recent rally.

• Soybean futures turned lower on late-week fund liquidation and weakness in the soybean meal market. December soybean meal ended the week with the lowest close since early June, pulling November soybeans to a similarly low weekly close.

• The Commitment of Traders report showed that for the week ending October 3, funds sold just over 25,000 contracts of soybeans, sold over 18,200 contracts of soybean meal, and were net buyers of 6,300 contracts of soybean oil. Fund length in the soybean market was pared back to just 5,000 contracts, the lowest since late May. Funds were net long 41,000 contracts of soymeal or the lowest since May 2022. Fund’s largest net long position was just over 41,000 contracts in soyoil.

• Soybean futures are deeply oversold, but steady/lower price trends are expected ahead of the October USDA reports that will be released Thursday. Cash markets look to be bottoming, but a lasting recovery will wait until after the October Crop Report.

• Chicago corn futures closed at $4.92, down 5 cents on the day. Dec corn retreated today after setting a one-month high yesterday. Some traders pointed to forecasts for favourable harvest weather as a contributing factor in the market’s selloff. The bearish mood was further exacerbated by the larger than expected US Jobs report which is seen as assuring the Fed will raise interest rates once again.

• Ship line-ups indicate that corn export inspections could be 35 million bu, the largest in half a year. At least one cargo is destined for China with more vessels to depart in coming weeks.

• The next target for Dec corn is around $5.07 then $5.25. Any S American weather problem lifts spot Chicago corn to $5.50. Until then, spot Chicago corn is locked in $4.50-5.25 range.

• Chicago December wheat closed at $5.69, down 9 cents. KC wheat closed at $6.73, down 17 cents. Minneapolis wheat closed at $7.20, down 8 cents. MATIF wheat was down slightly. Traders shrugged off news that a sea mine had damaged a cargo ship in the Black Sea.

• Agronomists judge Sep rain as a defining factor determining the size of Australia’s wheat crop. The nation’s weather bureau said that this year’s Sep weather was the driest on record. In addition to the drought, temperatures soared to record highs last month. The scattered rain received in the southeast has not substantially changed the crop’s outlook. We look for further reductions in both the Aussie and Argentine wheat crops.

• Global wheat prices have bottomed. Market upside potential will be determined by the size of S. Hemisphere crop sizes and when rain falls across Argentina/Australia.

• HEADLINES: Chicago corn above its 50-day moving average for the first time since July; Rumours that a Ukraine cargo ship struck a sea mine in the new corridor; GFS weather forecast drier across northern Brazil.

• Chicago grain markets are higher at midday with corn reaching above its 50-day moving average for the first time since July 28. Wheat futures have pushed to new weekly highs on the news that the Russian Government pegged their 2023 wheat crop at 90 million mt following a Rosstat stocks report that showed less than expected stocks in the hands of farmers. Chicago wheat is testing its 20-day moving average at $5.81 basis December. A close above $5.81 Dec Chicago will spur additional short covering with wheat trading 40 cents above Friday’s low and funds holding an estimated net short position of over 100,000 contracts.

• Soyoil futures are lower on the 2 day fall in energy values and the acute weakness in crude oil. WTI crude oil futures are down $1.30 and testing key support on the charts at $80-82.00. We would point out that it is order flow that is directing commodity valuations with few small traders or small funds trading. The market is being pushed up and down by large funds and their daily trading activity. We look for a strong Chicago close with Chinese traders returning from their Golden Week holiday on Friday and Monday. Soyoil prices appear to be too cheap relative to renewable diesel demand and the price of alternative vegoil and tallow prices. A bottom should be forming against $0.55.

• Chicago brokers report that money managers have bought 6,600 contracts of wheat, 17,500 contracts of corn, and 2,600 contracts of soybeans. In the products, funds have bought 4,600 contracts of soymeal while selling 3,400 contracts of soyoil. Chicago soyoil futures are closely following the intraday price moves in crude.

• FAS/USDA for the week ending September 28 that the US sold 10.0 million bu of wheat, 71.5 million bu of corn, and 29.7 million bu of soybeans. The US soybean sales lag is all due to Brazilian soybean exports and the hangover from the record 155 million mt crop. Brazil has now sold/committed for export 98.6 million mt of soybeans, so its old crop export program is finished.

• The Russian government estimated their 2023 wheat crop at 90.0 million mt, down 15 million from last year, but above the WASDE forecast of 85.0 million mt. The Siberian wheat harvest is just 57% completed. It is a sad issue in Siberia with rain producing constant quality and production falls. A year ago, Russian claims that its farmers harvested a monster wheat crop of nearly 105 million mt. The odds are high that this year’s harvest will end up between 87-89 million.

• Rosstat estimated Russian Sept 1 on farm wheat stocks at 28.8 million mt, down 9% from the year prior. The smaller stocks have some wondering of the USDA was right in forecasting 2022 Russian wheat production at 92 million vs 104.2 million mt.

• The midday GFS weather forecast is like the overnight run with showers falling in the next 24 hours across the E Midwest followed by a long stretch of cool/dry weather. The next chance of rain occurs from October 12-13 with rains of 0.4-1.50”. However, the rain is forecast to miss the Central Plains, which is far different from what the European model was forecasting overnight. Cooler temperatures start later today with Midwest highs retreating to the 50’s and 60’s with a frost/freeze this weekend. The relative chill lasts through next week with warming in the 11–15-day period.

• A smaller Russian wheat crop (and stocks) total argues that wheat has scored its annual low as pressure for Russia to actively export wheat subsides. Corn is following to the upside but will struggle to rise above $5.20. Argentine wheat crop ratings are expected to fall later today while Chicago soyoil futures bottom with energy. Group 3 Midwest soybean yields are disappointing on September heat/dryness. There are rumours that a Ukraine cargo ship has hit a sea mine which caused damage. Wheat is the upside Chicago leader.

• HEADLINES: Mixed Chicago trade in slowing volume as crude oil falls $4/barrel; Rumours persist on Ukraine and China demand; Mexico secures more US corn.

• Chicago grain markets are mixed at midday with corn/wheat trading in the red while soybeans bounce on spread unwinding. Active Chicago selling was noted on the opening, but the decline was met with end user pricing on the stability in non-US wheat/corn fob price offers. And US grain merchandisers are not seeing producers part with freshly harvested grain that was not forward contracted.   US, Brazilian and Argentine corn are all priced close to parity on a fob basis for December, the US holds the price advantage for Q1 2024 export demand. Traders expect that world corn demand will be slowly switching back to the US in the coming weeks with an increase in daily sales announced.

• Ukraine and its fledgling export corridor are being monitored. Ship traffic is increasing but buyers of Ukraine fob corn/wheat/sunseeds are keenly aware that should Russia attack Ukraine port infrastructure that they (contract holder) must have another source/option included in the sales contract. It is just too early to know whether Ukraine has a viable export corridor through the Black Sea without an agreement with Russia. We doubt that Russia will go back into the Black Sea Grain Pact based on their demands not being met.

• We have noted many times that seasonal bottoms are carved out over time and are not a one-time event. That bottoming process appears to be underway.

• Chicago brokers report that money managers have sold 4,200 contracts of wheat, 2,900 contracts of corn, while being flat in soybeans. In the products, funds have sold 3,200 soyoil while buying 900 contracts of soymeal.

• The USDA/FAS reported that Mexico purchased 196,607 mt of US corn.  No additional Chinese purchase of US wheat was indicated, but exporters report that China is asking for US SRW/SWW offers for January/February. China will be returning from their weeklong Golden Week Holiday on Friday which should release some pent-up demand for US soybeans. Brazil is no longer offering soybeans for December with current export commitments now over 99 million mt.

• Mexico is the largest purchaser of US corn for the 2023/24 crop year to date of around 8.0 million mt (including daily sales announced) which is more than 50% of the US total. Canada is also expected to step up its purchases of US corn due to their dire summer drought. Combined, both US neighbours are expected to account for 850 million bu plus of US corn imports in 2023/24.

• Southern Brazilian rains have fallen in abundance with strong straight-line wind producing structural damage across Parana. The coming heavy rain will pose another challenge for Brazil’s HRW wheat crop. Record September rainfall across RGDS produced wheat quality loss with there being no offers of milling grade for export. This new round of heavy rain will pose fresh problems for feed wheat and newly planted spring corn/soybeans. It is just too wet and sunshine and firmer soils are immediately needed.

• The midday weather forecast is like the overnight run with showers over the Central Midwest in the next 36 hours followed by a long stretch of cool and dry weather. Rain totals are estimated in a range of 0.1-0.9” and locally heavier. Much cooler temperatures occur starting tomorrow with Midwest highs retreating to the 50’s and 60’s with the next chance of Midwest rain occurring during October 12-14.  The S American weather pattern stays abnormal with flooding rain across SE Brazil and a deepening drought across Argentina.

• Rumours, Rumours, Rumours, there are rumours that Ukraine’s grain corridor is working normally, and it will supplant the Russian agreement, there are rumours that China is seeking additional US SRW/SWW wheat, and there are rumours of China pricing US soybeans. The rumours have supported a wide swinging Chicago. Fund order flow and intermarket spreads are featured. Today it is all about soy/corn and meal/soyoil spreading with crude oil prices down $4.00/barrel. There is a flow of Ukraine grain, but it is not equal to last year or normal. And the US soybean harvest is speeding ahead with yield reports highly variable but generally below last year. MN/WI soy yields are 3-6 bushels/acre below 2022. Yet, our macro fear is a weaker US dollar that pulls money back into commodities on the dysfunctional US Congress.  Brazil/China completed their first soybean trade in Yuan and Reals, not the US dollar.

• HEADLINES: US wheat rallies on Chinese demand confirmation; Group 3 soybean yields awaited; GFS weather forecast drier across S America next 10 days.

• Chicago grain markets are mixed at midday. Soy futures are lower on the accelerating Midwest harvest while funds are in their final stages of liquidating stale market length. Wheat futures are higher on news that the US sold 4 cargoes of SRW wheat to China (hearing additional quantities working) while Chicago corn is pinned between the two with harvest to dramatically pick up next week as soybean harvest advances and farmers switch back to cutting corn.

• Seasonal lows tend to be formed next week in soybeans with fund managers aware that international weather for wheat/soybeans is far from ideal. East Central Brazil will receive flooding rain while soils are rapidly drying across Argentina and Northern Brazil. We look for a mixed settlement today with soybeans to form a bottom either today or by early Wednesday. China should return late week with several days of pricing that has worked in their favour amid the Chicago decline. Pre-report positioning is expected next week with debates raging as to whether the US corn yield falls in the range of 170-176 bushels/acre and soybeans at 48.5-51.0 bushels/acre. Yield data that we hear paints a yield on the lower end of these trade estimates.

• Chicago brokers estimate that funds have sold 5,400 contracts of soybeans and 3,900 contracts of corn, while buying 2,300 contracts of Chicago wheat.  Funds have sold 3,900 contracts of soymeal while being flat in soyoil.

• FAS/USDA confirmed that China booked 220,000 mt of US SRW wheat and 265,000 mt of US soybeans. US SRW fob wheat had become the cheapest in the world and China saw an opportunity. Remember that under a 2018 WTO ruling, China must secure nearly 10 million mt of world wheat to follow their 2001 entry agreement. China been active booking French wheat, but Friday’s sharp Chicago price fall allowed US Gulf wheat to enter that mix. It is important to note that the 8.1 million bu US SRW wheat sale was not in the WASDE annual export grid. A sale of 500,000 mt US wheat (SRW/SWW mixed) would be 18.4 million bu and with 2023/24 US wheat exports at 135 million bu, such a sale ends up as being 14% of projected annual trade. The point is that US SRW wheat (spot Chicago futures) is cheap enough to encourage Chinese demand and likely bottom the Gulf fob market. A year ago, China booked 7.6 million mt of Australian wheat which is not available this year due to their drought. This leaves China looking to the EU/US and Black Sea wheat in the coming months for December forward shipment.

• EU wheat exports through September 30 stood at 7.4 million mt vs 9.8 million last year. The 2.4 million mt of reduced EU trade from July-October is based on last year’s strong start of the EU wheat export program before the Black Sea Grain Corridor Deal was signed in mid-July. We look for EU wheat exports to slowly increase in the months ahead (relative to last year) which makes the WASDE 37.50 million mt still too high by 1-2 million, with a total of 34.50-36.0 million mt closer to the right forecast with three quarters of the crop year remaining.

• US market analysts await Group 3 soybean yield results. The group 3 soybean harvest should start this weekend. Group 3 soybeans represent more than 30% of the US soy crop and they would be most impacted by the September (Midwest) heat/dryness due to their delayed maturation. We continue to maintain that there is great variability, but overall Midwest soybean yields are coming in below last year via small seed size.

• The midday GFS weather forecast is like the overnight run with limited Central US rainfall. The best Midwest rain looks to drop across from later today through Friday with totals of 0.1-0.9”. Thereafter, an extended period of dry weather follows which should allow the harvest to actively resume. Much cooler temperatures will occur from Thursday onward with highs retreating to the 50’s and 60’s with frost possible across N Wisconsin and N Minnesota this weekend. Next week appears to be largely dry for harvest.

• The flow of funds is dramatically reduced today which has sparked the Chicago price fall. The Midwest harvest is quickly advancing with 50% soybean progress to be reached sometime next week. There is plenty of time for cash sales on coming S American weather scares. And the Argentine Presidential election is Oct 19.

• HEADLINES: Chicago grains recover on short covering and new month inflows; US farms tight fisted with new harvest; HO-BO spread looks attractive.

• Chicago ag markets are in recovery as the surprise opening of the US government has traders thinking ahead to the October USDA Crop Report and potential US yield reductions based on the ongoing hot/dry Central US weather trends. Funds which were large sellers of wheat, corn, and soybeans on Friday, are covering a portion of that short. Soy futures are trying to follow, but the upside price risk has been in the grains. Note that fund managers are heavily short of wheat/corn while either being flat or a modest net long in soybeans. It is the positioning of funds that is making the difference across Chicago today. Other news is lacking, but there was a purchase of 210,000 mt of US corn by Mexico with 120,000 mt of US soybeans being sold to China. Friday’s Chicago break reached levels that caused end users to step forward and take forward coverage. World wheat millers would like to secure Russian wheat into Q1, but private offers are only available for the next 30-45 days.

• Chicago brokers estimate that funds are buyers of 6,300 contracts of wheat and 8,900 contracts of corn, and 3,200 contracts of soybeans. In soybean products, funds are net buyers of 4,900 contracts of soyoil and while selling a net 3,700 contracts of soymeal.

• The Ukraine Government elevated its 2023 grain crop estimate by 2% to 57.5 million mt vs 56.4 million back in August due to favourable weather. The forecast included 21.7 million mt of wheat, 5.7 million mt of barley, and 28.5 million mt of corn. Ukraine will also harvest 13.0 million mt of sunseeds and 4.6 million mt of soybeans.

• Ukraine has been active in trying to find world buyers for this year’s harvest by offering cheap fob offers. However, Central Ukrainian farmers are estimated to be taking 40% less for their crops due to surging transportation costs associated with the transhipment of grain through the EU. Ukraine farm margins are now negative which could impact the 2023 harvest as farmers leave standing corn, rather than going forward with the harvest. Ukraine is suffering from acute dryness that will lower 2024 winter wheat seeding.

• The HO-BO spread, heating oil vs soybean oil, has been a barometer for bio and renewable diesel profitability. The price of soybean oil is multiplied by 7.37 (pounds in a gallon) which deducted from the price of a gallon of heating oil to calculate the HO-BO margin. US energy prices have been rising on tightening supplies which has pushed the HO-BO spread to its most profitable levels in years. US biodiesel and renewable diesel producers are responding with expanded operations and use of vegoils/tallows and used cooking oil. The expansion of US renewable diesel capacity in recent months means that the imports of used cooking oil can no longer swamp the market as they did in Q1 of 2023. And a massive new Philipps 66 renewable diesel plant will come online in early 2024 that massively adds to US capacity. Unfortunately, most of the US’s new crush capacity won’t come online until Q3 in 2024.

• There are rumours this morning that China is looking for US wheat for December/January from the PNW. We cannot confirm anything but the rumour.

• The midday weather forecast is like the overnight run with limited Central US rainfall over the next 10 days. The best rain looks to drop across the Central and Eastern Midwest from Wednesday through Friday with totals of 0.1-0.8”. Thereafter, an extended period of dry weather follows which should allow the harvest to actively resume. Much cooler temperatures will occur from Thursday onward with highs retreating to the 50’s and 60’s with frost possible across Northern Wisconsin and Northern Minnesota on the weekend. Kansas/Nebraska will stay arid which will delay HRW wheat seeding. More rain is needed for proper seed germination.

• The bears were emboldened by the chance that the US government would close which would cause the flow of information to be diminished leaving traders to focus on the rapidly advancing Midwest harvest. Few newly harvested bushels are being sold across the weighbridge with cash basis bids sharply discounted by the low flow of the Mississippi River and Brazil’s filling of world corn and soybean demand. Farmers are going to store their crop. S American weather is far from favourable, but it is too early for any undue concern. China is expected to return late week with Chicago pricing which should lift the complex. The longer-term bull story is soyoil on renewable diesel demand and expansion of US capacity. Chicago is a trading market until S American weather becomes more important.

• HEADLINES: Bearish 2023 HRS wheat surprise; US corn stocks below last year at 1,361 million bu; Soybean stocks 18 million bu larger than WASDE.

• Chicago ag markets are sharply lower following the USDA September 1 Stocks in All positions and final US 2023 Small Grain Production report. The surprise of the report was a larger than expected decline in final 2023 US corn stocks, and a larger than expected rise in US wheat production. US soybean stocks were slightly larger, but generally within trade expectations.

• NASS/USDA forecast 2022/23 US corn end stocks at 1,361 million bu, down 91 million bu from the September WASDE estimate and 16 million bu below the year prior stocks. We calculate the Q4 US corn feed/residual use rate at 696 million bu, down 81 million bu from last year, but far larger than had been forecast by WASDE. Fourth quarter US corn disappearance at 2.75 billion bu was 220 million bu less than the prior year due to sliding US corn export demand of 343 million bu. A year ago, the US exported 525 million bu or 181 million bu more corn. Most of the decline in Q4 US corn use was the drop in export demand. The 1,361 million bu defines 2022/23 US corn end stocks which places added importance on 2023 US corn yields. The US 2022 US corn crop was revised down 15.0 million bu on a further review with the 2022 yield pegged at 173.4 bushels/acre.

September 1 US Stocks (million bu)

            2021        2022        2023

Corn            1,234        1,377        1,361

Soybeans        257        274        268

Wheat            1,774        1,778        1,780

• NASS forecast 2022/23 US soybean end stocks at 268 million bu, up 18 million bu from the September WASDE. 2022/23 soybean stocks were down 6 million bu or 2% from last year. We calculate the Q4 US soybean residual at -125 million bu as NASS adjusted last year’s US soybean crop down 5.9 million bu with a yield of 49.6 bushels/acre. NASS adjusted 2022 US soybean harvested acres downwards to 86.17 million acres. The 2022 Q4 soybean residual last year was -123 million bu. The additional 18 million bu of 2022/23 soybean end stocks will be added in the next WASDE report. The 2022/23 US annual soybean residual is estimated the largest level since 2004.

• US wheat production data leans bearish in that NASS shocked the marketplace with a much larger spring wheat production number. Final US HRS production is pegged at 468 million bu vs. 413 million in July, and despite very weak crop ratings in August. Final HRW production is 601 million bu, vs. 585 million in July. Total US wheat production was lifted 77 million bu to 1,811 million. This compares to 1,650 million in 2022/23. Yet, KC and Minneapolis futures have been actively shedding premium in preparation of larger final yields. We doubt that 2023/24 US wheat end stocks will be raised by more than 5-15 million bu in USDA’s Oct WASDE due to larger than expected feed consumption.

• June-Aug wheat feed/residual disappearance totalled 219 million bu, up 80 million (58%) from the previous year. We expect USDA to raise annual feed/residual by 30-40 million bu. This along with better than expected export sales (relative to USDA’s forecast) keeps final US wheat end stocks at 615-625 million bu. The HRS balance sheet will loosen most compared to WASDE estimates in early September. Wheat futures have pushed to new lows on the decline with support in December Chicago wheat found under $5.50/bu.

• The midday GFS weather forecast is like the overnight run with limited Central US rainfall over the next 10 days. The best rain looks to drop across the Northern Plains and WC Texas. Midwest rains hold off until mid-next week on a frontal pass. A cool forecast is offered after October 7 with a frost likely across S Canada and the far NC Midwest.

• Red is the colour of Chicago pricing boards at midday amid bearish wheat data, a lack of bullish soy data, and as equity markets stay concerned about the rising likelihood the US government being closed on the weekend. Wheat must contend with an already opaque Black Sea market and the lack of future USDA data will leave cash traders even more in the dark. Otherwise, it is normal for spot Chicago soy to score its annual low in early October. Downside risk in corn is limited. Wheat is undervalued and oversold, with Paris milling contracts finding support at late August/mid-Sep lows. Gulf SRW this weekend will be quoted $5-6/mt below French origin. China is on holiday next week and US farmers will squirrel away their new crop harvest waiting for a Chicago rally and improvement in basis. Soyoil is the only Chicago grain that is not impacted by slowing export demand. Its bull story is rooted in demand via renewable diesel.

• HEADLINES: Month and quarter end liquidation felt this morning; USDA/NASS crop reports Friday; China rumoured to secure Ukraine corn; can you book freight; Chicago volatility ahead.

• Chicago ag markets are mixed at midsession with corn higher, soybeans lower with wheat trapped in between. Soyoil is lower as oil share spread unwinding is occurring which has pushed soymeal into the green. Yesterday was just the opposite with soyoil soaring to strong gains as soymeal sagged. Chicago has been choppy for most of the week with traders focused on the NASS Stocks/Final Small Grain Report tomorrow. The growing potential for the US Government to close on the Budget impasse while the harvest is ongoing produces liquidation on both sides of the ledger, selling of length in soybeans/soyoil and the buying in of shorts in corn. If we had to bet on the USDA report tomorrow, we suspect it will lean bullish to corn/soybeans based on strong cash basis bids.

• The week has produced fogginess regarding the Black Sea grain trade. Yesterday there was a cargo of Ukraine wheat offered by Nibulon at $239/mt ($16/mt below Romanian) but Egypt’s GASC nor others could fix freight to loadout the Ukraine wheat.   There have been 5 vessels that have passed through Ukraine’s new export corridor, but 2 were ships that were locked down when the war started in March of 2022 while others carried grain, concrete and iron ore. Ship brokers are unable to provide a cost to transit Ukraine grain while Russia keeps attacking Ukraine port infrastructure with Mykolaiv hit overnight.

• Although newswires report that China has booked a large amount of Ukraine corn for November/December, the execution of the sale will be difficult. Freight and insurance are nearly impossible to find as no one wants to become trapped in port by the war. Thus, it is not known whether a workable marine grain export corridor exists from Ukraine for ongoing commercial grain transactions. And the fear is that the Russian military keeps targeting port infrastructure.

• US weekly export sales for the week ending September 21 were 20 million bu of US wheat, 33.1 million bu of corn, and 24.7 million bu of soybeans. For their respective crop years to date, the US has sold 337 million bu of wheat (down 56 million or 14%), 495 million bu of corn (down 17 million or 3%), and 652 million bu of soybeans (down 330 million or 33%). China has booked 7 million mt of US soybeans with another 5 million mt likely held in an unknown destination category. We anticipate China taking 1,050 million bu of US soybeans in 2023/24.

• Chicago brokers estimate that managed money has sold 4,700 contracts of soybeans and 3,900 contracts of soyoil, while buying a net 900 contracts of wheat, 6,600 contracts of corn, and 3,900 contracts of soymeal. Active meal/oil spreading is noted as yesterday’s buyers are today’s sellers.

• The EU cut its wheat crop estimate to 125.3 million mt (down 700,000 mt) and its corn crop to 59.8 million mt (down 1.9 million). The smaller corn crop will mandate additional corn imports from Ukraine to make up for the losses. A year ago, their corn crop was 52.3 million mt as drought gipped much of Western Europe.

• There have been rumours that China has shifted 3-6 cargoes US soybean to Brazil and Argentina due to cheaper price offers. The rumours started that the US PWN soybeans were being switched, but this makes no economic sense. We are hearing that 3-6 cargoes of US Gulf soybeans were swapped. The export tail of S American soybeans is long as the Argentine soy/dollar program ends.

• The midday GFS weather forecast is drier across the W Midwest and wetter across the E Midwest than was offered overnight. Neither area has rain that will delay harvest for more than a few days, but the totals will help keep the dust down and prevent soybean seeds from having moisture levels less than 11%. Much cooler temperatures and frost will touch the N Plains and the Upper Midwest after October 8.

• End of month and end of quarter position squaring is ongoing with liquidation noted in soybeans/soyoil. China is out on holiday next week (Golden Week) which has sparked rumours of US soybean sales being switched to S America. US Sept 1 corn stocks could hold a bullish surprise on feed use that is not as low as 600 million bu. We see US 2022/23 US corn end stocks at 1,409 million bu and soybean stocks at 220 million bu. Funds are now short more than 100,000 contracts of Chicago wheat, a risk in our view.

• HEADLINES: Oil share back in vogue on surging energy; Wheat futures sag on GASC purchase of Romanian/Bulgarian wheat; US ethanol production up 18%.

• Chicago ag markets are mixed at midsession with aggressive price offers to GASC pressuring Chicago wheat values, while corn futures rise above chart resistance due to a surge in energy prices. Soyoil/soybean futures are following the rise in corn in expanding volume, while meal sags on expanding US crush operations.

• A close above $4.83 basis December corn futures sets a bottoming chart phase that projects an initial rally to $5.10-5.20. And seasonal lows often occur in soybeans in early October as the US harvest pushes beyond 40%.

• The bottoming of the Russian wheat market (whether by slowly rising interior bids or by the Russian Government’s hardening their stance at $270/mt (fob offer prices) is starting to round out a bottom. The difficult question remains on world demand which is soft due to the rising US dollar and high lending rates. Demand remains the key question that traders and producers are monitoring.

• Chicago brokers estimate that managed money has bought 2,900 contracts of soybeans, 3,600 contracts of soyoil, and 5,600 contracts of corn. Managed money has sold a net 1,900 contracts of soymeal and 3,100 contracts of wheat.

• Chicago price direction has been largely based on fund flows for the past several weeks, and this trend looks to persist.

• Egypt’s GASC secured 170,000 mt of Romanian and Bulgarian wheat in an overnight tender at $255/ basis fob. Russian wheat was offered at $270/mt fob which was non-competitive with Eastern European offers. Nibulon offered Ukraine wheat to GASC at $239/mt, but we are told that no one would offer freight to move the grain. Although rumours persist that grain is trading out of Ukraine ports, the unfortunate truth is that few shipowners are willing to take the marine transit risk. And we are doubtful that the Russian Government has entered or negotiated a 1.0 million mt wheat sale to Egypt. The Egyptian Government is short of wheat and has need to expand imports from late October into early 2024.

• US energy prices are surging as deliverable US crude oil stocks continue to decline at Cushing, OK, which is related to strong demand. US crude stocks fell 2.2 million barrels to 416.3 million while Cushing stocks fell by 943,000 barrels to just 22 million barrels, the lowest since July 2022. US WTI crude oil futures rose by $3.50 to just over $94.00. The rise in US and world energy prices is making biofuel fuel production more profitable.

• US weekly ethanol production amounted to 297 million gallons, or up 18% from last year. US ethanol stocks rose to 926 million gallons, 3% below last year. US ethanol margins are holding at their best levels in a decade.

• The midday GFS weather forecast is wetter across the Central and Eastern Midwest forecast in the week 2 period. Showers will dot IN and OH prior to the weekend with totals of 0.4-1.00”. Thereafter, a 6–7-day period of warm/dry weather occurs before the overall NC US weather pattern turns cooler/wetter with a low-pressure trough settles southward. Confidence in this cooler/wetter forecast is increasing. High temperatures are advertised in the 80s and 90s across the S Plains and the Delta for the next week with 70s and 80s elsewhere. Rapid Midwest harvesting is anticipated, but the need for a rejuvenation of river levels is growing. The wetter 10–15-day forecast offers hope for improved stream flows across the Central and Eastern US.

• It is all about Friday’s NASS Stocks and Final Grains report. Although Ukraine is offering cheap grain at several ports, vessel owners must be willing to take the risk. Traders are trying to measure the amount of grain which will leave Ukraine, our early assessment is that it will be 40-50% less than last year’s pace. Soyoil is the bullish ag commodity on demand. The availability of an October USDA Crop Report depends on whether the US Government closes due to the 2024 budget impasse.

• HEADLINES: Chicago dull, choppy at midday; US dollar scores new rally high.

• Chicago ag markets continue to do very little ahead of the release of NASS stocks data. Final US wheat, barley and oat production will also be published as well as a revision to final 2022 US soy production. The market is aware that feed/residual is difficult or nearly impossible to measure on a quarterly basis, and so surprises are possible. We note the USDA’s call that US corn feed/residual collapsed in the Jun-Aug period. We doubt corn data leans bearish on Friday.

• Adverse weather battling risk-off in macro markets best defines the morning session. The US dollar index at midday has scored a newer 9-month high, with currencies in Russia, Brazil, and Australia weaker by varying degrees. The Dow is down 270 points and has lost 2.4% so far in September. Macro weight and the lull of the global crop calendar, US weather is becoming irrelevant, S American weather’s importance increases in October, continue to limit market participation. Breaking news today is absent. Milling wheat and corn futures in Paris are flat.

• Yet, traders must be mindful of ongoing weather abnormalities. We note that rainfall in E Australia next week is projected to be more scattered in nature. There is no indication that a pattern shift to wetter weather occurs in eastern Ukraine and Southern/Central Russia prior to Oct 6. Drought in Argentina worsens over the next 10 days, with first-crop corn and soy planting typically beginning in October. Weather patterns become a bigger deal beyond the next 1-2 weeks.

• Soyoil futures have recovered as WTI crude stays resilient at/above $90 per barrel. Weekly EIA data on Wednesday morning is expected to show crude and motor gasoline stocks steady to slightly lower week on week. Energy supplies are not abundant. Ethanol production margins remain massively profitable. Renewable diesel margins have improved since mid-Sep on soy oil’s break.

• Board crush margins at $2.00+/bu and crush margins in the cash market at $3.00+ since July are working to maintain a sizeable expansion in US crush capacity, which is a big deal in the long run, and places even more important on yield performance in S America this winter.

• The midday GFS weather forecast is wetter across the Upper Midwest in the 11–15-day period, with rainfall totals of 2-4” forecast Oct 8-10 in IA, MN and WI. However, confidence in forecast details is low. Otherwise, light/moderate showers will linger in the eastern Midwest into Thursday. Dryness and abnormal warmth then blanket the whole of the Central US during the opening week of October, with high temperatures advertised in the 80s and 90s across the S and C Plains. Highs are projected to reach the 70s and 80s elsewhere. Rapid harvesting is anticipated, but the need for a rejuvenation of river levels is growing. A wet late autumn/winter is hoped for.

• Both the bulls and bears are struggling for leverage. We are increasingly recommending sourcing supply coverage on weakness. Positive seasonal trends are known. Ongoing S American weather adversity or the loss of just 0.5 bushels/acre of US soy yield mandate the addition of premium.

• HEADLINES: Chicago mixed in thin volume; Funds shed length in soyoil; S American weather forecast too dry.

• Chicago ag markets are mixed but little changed in thin volume. It is clear few want to add to existing positions or boost participation ahead of key NASS data on Friday. A clearer row crop yield trend will also be known in the next 10 days, and today there is just nothing for fund managers to sink their teeth in. Our belief is that a bullish final 2022/23 US corn stocks surprise is possible and as USDA’s annual corn feed/residual number implies a dramatic contraction in disappearance in the Jun-Aug period. Otherwise, low volume/choppy trade is anticipated into Friday morning. US dollar strength has capped new buying. Attacks in the Black Sea from both Ukraine and Russia are intensifying, but interior Russian wheat markets have shed premium on large current stock levels.

• We would note that typical Chicago soy seasonals imply a market bottom in the first half of October, a bit after corn, and importantly crush margins have held up well in recent week. The spot futures-based margin on Monday sits at $2.18/bu, vs. $2.20-2.25 last week. Margins are better yet in the cash market, and crush capacity expansion will be a feature of the N American soy/oilseed markets into 2025.

• We believe today’s sharp correction in nearby soyoil is short sighted, and in the long run we are unsure show US soy supply and demand will be balanced if national yield is trimmed even slightly. A US soy yield in USDA’s Oct WASDE below 50.0 bushels/acre is bullish of cash prices into spring 2024. USDA will be reluctant to raise its 2023/24 US soy consumption forecast as end stocks of 200-220 million bu reflect pipeline minimum stocks. Rather the market must sort out how much export demand is deferred or eliminated altogether.

• US export inspection in the week ending Sep 21 included 26 million bu of corn, vs. 27 million the previous week, 18 million bu of soybeans, vs. 16 million the previous week, and 17 million bu of wheat, vs. 16 million the prior week. In the respective crop years to date, exporters have inspected 77 million bu of corn, 16% above last year, 47 million bu of soybeans, up 6%, and 206 million bu of wheat, down 28% from mid-Sep 2022.

• Other breaking news is lacking. Into the middle or latter part of autumn we expect the replenishment of physical supplies across the Northern Hemisphere to battle worrisome global climate patterns. Changes in patterns are not indicated in Argentina, Northern Brazil, Australia or much of the Black Sea region in the next 10 days. The midday GFS weather forecast keeps rainfall in Mato Grosso do Sul, Mato Grosso, Goias and Bahia confined to very light/scattered amounts, which does nothing for soil moisture amid abnormal heat. Rainfall in E Australia has been pushed into the 11–15-day period. Developing dryness in E Ukraine/S Russia needs closer monitoring in October.

• History shows that autumn precipitation/soil moisture in Russia has a noticeable impact on yield potential the following spring.

• The GFS weather forecast in the US is wetter across the Southern Plains HRW Belt Oct 2-5, with accumulation in the TX, OK panhandles and SE CO pegged at 1-3+”. A few showers disrupt harvest efforts across the NW Corn Belt & IL/IN in the next 48 hours, but major delays are absent. Abnormal warmth will be featured Central US-wide into Oct 10. Frost/freeze dates across the N Plains/Upper Midwest will be much later than normal.

• Chicago markets are adrift awaiting final clarity on US production/supply. Abnormal S American weather is not yet directly impacting productivity, but weather in Brazil especially becomes more important in the next 10 days. Normally some 40-70% of soybeans in Mato Grosso are planted in the first three weeks of October. Rain is needed. Mexico this morning purchased 41 million bu of US corn from 2023/24 delivery, and US corn on a fob basis is competitive with Brazilian origin.