19 September 2024

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  • Grains sag on charts and harvest pressure; Soybeans bounce with US soyoil export sales; Volume slows at midday.
  • Chicago grain futures are lower at midday with wheat futures leading the decline. The expanding Midwest harvest and chart-based selling has pushed corn lower. Soybeans have traded on either side of unchanged with stronger than expected weekly export sales offering support. US wheat futures are pulling back for chart-based reasons as Russian wheat fob prices hold stubbornly at $216/mt, a price level that has existed for weeks. The Russia wheat export pace has been record large due to their price competitive position. EU/US and Aussie fob wheat offers are holding well above Russia, but dryness is starting to gain the attention of the Russian farmer with a calendar need to get seed in the ground ahead of winter. SW Russian farmers like to have their winter wheat crop seeded by the middle of October and the 2-week forecast offers limited rainfall. The Black Sea drought is ongoing and could adversely impact new crop wheat without a pattern change. We look for a lower Chicago close on US harvest considerations with support noted below $4.04 in December corn futures and below $5.60 in December Chicago wheat.
  • Chicago brokers estimate that managed money has sold 4,300 contracts of wheat, 6,100 contracts of corn, and 1,200 contracts of soybeans. In the products, fund managers have sold 1,300 contracts of soymeal while buying 2,900 soyoil.
  • FAS’s daily reporting system was void of new US export sales. Chinese demand is lacking for US soybeans following their Autumn Festival holiday.
  • For the week ending September 12, the US sold 9 million bu of wheat, 33.4 million bu of corn and 64.2 million bu of soybeans. Soybean sales were larger than expected with the grains disappointing. For their respective crop years to date, the US has sold 405 million bu of wheat (up 88 million or 28%), 559.4 million bu of corn (up 97 million or 21%), and 588 million bu of soybeans (down 37 million or 6%). We maintain that WASDE is too low on 2024/25 US corn and wheat exports, and too high on soybean exports. However, the US soybean export pace has scored solid strides as China has boosted purchases in the past 6 weeks. We estimate that China has now purchased more than 10 million mt of US 2024/25 soybeans or about 45% of their projected annual total with the crop year just starting.
  • The US also sold 46,700 mt of US soyoil with Canada and Mexico the largest weekly buyers. US 2023/24 soyoil crop year commitments stand at 280,300 mt. We look for WASDE to trim its 2023/24 soyoil export estimate of 650 million pounds slightly, but a large share of today’s sales is being shipped out. US Gulf soyoil is priced at parity or slightly below crude palmoil which will enhance future US soyoil exports. The enhanced renewable diesel and export demand looks to further drop US 2023/24 soyoil end stocks. The demand bull story for soyoil is building on strong domestic demand.
  • The midday weather forecast is further south with rainfall across the Western and Southern Plains. A hurricane is forecast to push NE across Tampa Bay on 29 September. No frost/freeze is indicated with the Midwest harvest to make rapid progress through October 4.
  • The forecast is a touch drier with this run less enthused about breaking out rains across Northern Brazil in the 11-15-day period. Some light rain would fall across Northern Mato Grosso on October 2-4, but that is too far out for any confidence. Rainfall totals would range from traces to 0.5” during early October. A deepening drought grips N Brazil with extreme heat to persist.
  • The expanding/advancing Central US harvest has corn under pressure while wheat sags on the premium of US/EU fob wheat vs Russian offers. Soybeans won’t break until needed rain drops across Northern Brazil.

18 September 2024

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  • US Central Bank interest rate decision awaited; French wheat protein levels disappointing; US weekly ethanol grind holds strong.
  • Chicago grain futures opened higher on macroeconomic expectations that the US Central Bank will start a new rate cutting cycle this afternoon. A weaker US dollar, lower borrowing costs amid a more balanced labour market contributed to a broad commodity index rally. The 2-year period of rate hikes in the US Central Bank’s battle against inflation is ending.  Traders are hoping for a 0.5% cut in the US’s Fed funds lending rate this afternoon and a broadening raw material rally. It is the reaction of the financial markets to the Fed’s rate cut, not the rate cut itself, which has been telegraphed.
  • Managed money has been cutting back their net short grain positions for nearly a month as price reached downside targets. Managed money was let out of their net shorts without much market disruption as US farmers made old crop cash sales into the managed money profit taking. Now the US farmer is expected to store as much of their new crop harvest as possible with the cash bids being well below breakeven. US farmers see corn as having more upside price potential vs soybeans. We could agree with this assessment as S American farmers prepare to seed record large soybean acres. The longer-term bearish price risk rests in soybean values if Brazilian farmers harvest a record large soybean crop in early 2025.
  • FAS’s daily reporting system was void of new US export sales. China has been on a 2-day holiday and is expected to get back to securing US soybeans for November/December on weakness.
  • Just 41% of the French wheat crop had a protein level greater than 11.5%, which meets milling standard for most of the EU. In a normal year, nearly 60% of the French soft wheat crop reaches 11.5%. Excessive rainfall has produced a greater share of the French wheat crop being classified as feed. The smaller exportable share of French milling wheat has produced record demand/exports for Russian wheat.
  • Weekly US ethanol production at 308 million gallons was down 10 million gallons from the prior week, but up 4% from last year. US ethanol stocks at 999 million gallons were up 3 million gallons from last week, but up 10% from last year. US ethanol production margins are positive with the grind record large in the first couple of weeks of the crop year. Pace analysis will be closely followed with 2024/25 production likely to exceed last year. The US crude oil stock fell to 418 million gallons, down 1 million gallons on the week. The Biden Administration is using the price break to add supply to the US Petroleum Reserve. December crude oil has support at $63-65/barrel.
  • US Deputy Sec of State Kurt Campbell indicated to the US House of Foreign Affairs Committee that challenges posed by China now exceed those of the cold war. Beijing’s support for the Russian defence industry have come directly from the top Chinese leaders. America needs to dramatically to improve its naval capacities to counter the new partnership of Russia/China. The growing political stress between the US and China/Russia offer a challenging future.
  • The midday weather forecast run is little changed from the overnight solution, except that a tropical storm is forecast to develop in the Gulf of Mexico and make landfall around September 26 in the Florida Panhandle. Look for the tropical activity in the Gulf of Mexico to produce run to run forecast uncertainty beyond the next 5-6 days.
  • Traders will await the US Central Bank’s interest rate decision early this afternoon. A US longshoreman strike remains a risk on October 1 to US ag exports from the Gulf and Eastern US ports. And the US Government could shut down without a continuing budget resolution that is tied to non-citizen voting in the November election. Early US corn and soybean yield data is impressive, but it is too early to call for a trend vs USDA. We expect that rallies and breaks will fail into October.

17 September 2024

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  • Chicago little changed in mediocre volume; Brazilian, Black Sea weather issues linger; No new US export sales announced.
  • Chicago futures are mixed, but little changed, with wheat contracts forced to contend with selling in Paris milling futures and the ongoing absence of upward momentum on Russia’s cash fob market, while corn and soy add very modest premium. Market focus is transitioning from record US yields to positive seasonal trends in all market between early autumn and early spring, while numerous weather issues linger in the background. Other market-driving input is lacking. Volume is rather mediocre so far today.
  • CONAB in its first look at new crop production pegged 2024/25 Brazilian soybean production at 166.3 million mt, vs. USDA’s 169. 2024/25 total Brazilian corn production is forecast at 119.8 million mt, vs. USDA’s 127. There is not much that can be said about new crop Brazilian output and exports until seeding is complete, and seeding dates today are highly uncertain, and until Dec-Jan weather patterns are better known.
  • We note there is less confidence in CONAB’s forecast given the lack of convergence with USDA balance sheets. Additionally, trade data implies USDA’s 2023/24 Brazilian soy production estimate of 153 million mt, vs. CONAB’s 147.4, is closer to reality. Unfortunately, it remains that it is exports 8-10 months after harvest that is the best indicator of Brazilian crop yields production.
  • FAS’s daily reporting system was void of new US export sales. US Gulf corn is quoted near parity with other origins into Asia for early autumn arrival, and so there is competition for nearby importer demand.
  • There is time for weather improvement in the Black Sea and South America but worry accelerates if pattern changes stay absent into early October. We would note recent rainfall in Ukraine was less widespread than expected, and a pattern of net soil moisture loss is most probable in key winter crop producing areas of E Ukraine and S Russia into Oct 1.Soil moisture is insufficient (absent entirely) in eastern and southern Ukraine as well as southern Russia.
  • The midday GFS weather forecast keeps in place a pattern of complete dryness and abnormal heat across central and northern Brazil throughout the next two weeks. Sustaining drought at tropical latitudes of Brazil, including Mato Grosso, is difficult, but it is soybean seeding dates that are in the hands of Mother Nature. A year ago, Mato Grosso soybean seeding was 35% complete on Oct 15. Rain is needed before fieldwork begins this year.
  • In the US the GFS weather forecast maintains needed rainfall across the eastern Midwest and Great Lakes Region in the 6-10 day period. Heavy showers remain projected across the Central Plains, and so rainfall of 1-2” will be spread from KS/NE into OH/PA Sep 22-25. It is too late to aid yield potential but any/all rain is welcomed following the expansion of abnormal dryness/drought and as river levels across southern sections of the Mississippi remain deflated. Temperatures lean above normal to well above normal throughout the next 10 days.
  • It is a dull/choppy day. Crop conditions imply little change to NASS’s projected yields in mid-Sep. Combine data over the next 3-4 weeks will determine the extent that late season heat and dryness had on pod and kernel weights. Be prepared for choppy/rangebound trade through the remainder of September, but lingering issues in Brazil and the Black Sea along with positive seasonal price trends suggest breaks are opportunities for end users.

16 September 2024

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  • Soybeans sag on lacklustre US export demand; Paris wheat struggles with expirations/convergence; N Brazilian weather dry into October.
  • Chicago futures are mixed at midday with soy futures lower while the grains hold onto an overnight rally. Cash hedge related pressure in soybeans along with speculative demand in corn has produced the mixed midday session. Talk that Brazil has sold China a few additional cargoes of October soybeans along with the expectation of hedge pressure at the close as caused values to pull back. December Chicago wheat nearly reached $6.00 resistance while December Paris wheat futures targeted €230.00. The market has a tired feel at midday with neither the bulls or bears feeling inspired. Look for a mixed close with soy futures under pressure due to fund related selling in soyoil and buying in wheat/corn.
  • The USDA reported that 100,000 mt of US soybeans was sold to China for the 2024/25 crop year. Amid this week’s purchases, China’s known purchases of US soybeans are over 5.0 million mt with unknown sales estimated at 4.0 million. So far, it appears that China has booked circa 9.0 million mt of soybeans out of an estimated total of 22-23 million for the 2024/25 crop year. Last year, China imported 24.3 million mt of US soybeans.
  • Chicago brokers report that funds have bought 5,600 contracts of corn and 5,900 contracts of wheat, while selling a net 5,400 contracts of soybeans. In the soy products, funds have sold 3,900 contracts of soyoil and 2,100 soymeal.
  • Paris wheat futures have had a big week of trade with the expiration of the September futures at €188/mt and the push by December near €230/mt. A large weekly reversal has been scored on the charts that has not gone unnoticed by hedge funds. Paris wheat is having trouble with expirations with big downward price falls followed by surges in the next futures contract. Some are questioning the integrity of Paris wheat futures with cash/futures being discounted at expiration and back months holding at sizeable premiums. Both May and September expirations have lacked convergence with the cash market. The only way that a regulator knows that a wheat futures contract has integrity with the cash market is to converge at expiration. Otherwise, the contract is disconnected from the cash market causing headaches for hedgers and end users. Part of the problem with Paris wheat is delivery is at Rouen France with storage rates beyond the first 10 days up to private negotiations. Accordingly, few are willing to take ownership of cash wheat at delivery. Rouen is an export port, which is unhelpful to convergence.
  • We look for weekly NASS corn and soybean good/excellent crop conditions to decline 1-2% on Monday amid the ongoing flash drought.
  • Dry/warm weather is maintained across the Midwest next week with just a few showers over the N Plains next Friday. Otherwise, the hot/dry Midwest weather pattern is unrelenting. The Eastern Midwest will be the driest with some areas having not seen rain for a month. Crop maturity is being pushed with high temperatures ranging from the upper 70’s to the lower 90’s. Rains break out across the W Plains next weekend with a new tropical storm in the Atlantic to target the Eastern US states.
  • The 10-day forecast offers no rain across Northern and Central Brazil. The drought will worsen with the monsoon showing no sign of activation. Showers will form across NE Argentina and far Southern Brazil into late September. Spring row crop planting is on hold as farmers await at least 2-4.00” of rainfall.
  • Harvested yield reports will become numerous next week amid ongoing hot/dry Midwest weather that is pushing crop maturity. NOPA will be out on Monday, and we would look for an August crush rate of 173 million bu and soyoil stocks of 1,290 million pounds. A sustained break in the soy complex will not occur until needed rain falls across N Brazil. Likewise, corn rallies are capped by new crop selling.

13 September 2024

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  • Soybeans sag on lacklustre US export demand; Paris wheat struggles with expirations/convergence; N Brazilian weather dry into October.
  • Chicago futures are mixed at midday with soy futures lower while the grains hold onto an overnight rally. Cash hedge related pressure in soybeans along with speculative demand in corn has produced the mixed midday session. Talk that Brazil has sold China a few additional cargoes of October soybeans along with the expectation of hedge pressure at the close as caused values to pull back. December Chicago wheat nearly reached $6.00 resistance while December Paris wheat futures targeted €230.00. The market has a tired feel at midday with neither the bulls nor bears feeling inspired. Look for a mixed close with soy futures under pressure due to fund related selling in soyoil and buying in wheat/corn.
  • The USDA reported that 100,000 mt of US soybeans was sold to China for the 2024/25 crop year. Amid this week’s purchases, China’s known purchases of US soybeans are over 5.0 million mt with unknown sales estimated at 4.0 million mt. So far, it appears that China has booked circa 9.0 million mt of soybeans out of an estimated total of 22-23 million for the 2024/25 crop year. Last year, China imported 24.3 million mt of US soybeans.
  • Chicago brokers report that funds have bought 5,600 contracts of corn and 5,900 contracts of wheat, while selling a net 5,400 contracts of soybeans. In the soy products, funds have sold 3,900 contracts of soyoil and 2,100 soymeal.
  • Paris wheat futures have had a big week of trade with the expiration of the September futures at €188/mt and the push by December near €230/mt. A large weekly reversal has been scored on the charts that has not gone unnoticed by hedge funds. Paris wheat is having trouble with expirations with big downward price falls followed by surges in the next futures contract. Some are questioning the integrity of Paris wheat futures with cash/futures being discounted at expiration and back months holding at sizeable premiums. Both May and September expirations have lacked convergence with the cash market. The only way that a regulator knows that a wheat futures contract has integrity with the cash market is to converge at expiration. Otherwise, the contract is disconnected from the cash market causing headaches for hedgers and end users. Part of the problem with Paris wheat is delivery is at Rouen France with storage rates beyond the first 10 days up to private negotiations. Accordingly, few are willing to take ownership of cash wheat at delivery. Rouen is an export port (like a hotel) which is unhelpful to convergence.
  • Dry/warm weather is maintained across the Midwest next week with just a few showers over the N Plains next Friday. Otherwise, the hot/dry Midwest weather pattern is unrelenting. The Eastern Midwest will be the driest with some areas not having seen rain for a month. Crop maturity is being pushed with high temperatures ranging from the upper 70’s to the lower 90’s. Rains break out across the W Plains next weekend with a new tropical storm in the Atlantic to target the Eastern US states.
  • The 10-day forecast offers no rain across Northern and Central Brazil. The drought will worsen with the monsoon showing no sign of activation. Showers will form across NE Argentina and far Southern Brazil into late September. Spring row crop planting is on hold as farmers await at least 2-4.00” of rainfall.
  • Harvested yield reports will become numerous next week amid ongoing hot/dry Midwest weather that is pushing crop maturity. NOPA will be out on Monday, and we are looking for an August crush rate of 173 million bu and soyoil stocks of 1,290 million pounds. A sustained break in the soy complex will not occur until needed rain falls across N Brazil. Likewise, corn rallies are capped by new crop selling.
To download our weekly update as a PDF file please click on the link below:

12 September 2024

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  • Sep WASDE lacks fireworks; US corn yield raised; Soy yield unchanged.
  • The NASS US September corn yield at 183.6 bushels/acre was slightly bearish, being up 0.5 bushels/acre from August. The US NASS September soybean yield was 53.1 bushels/acre or right at the August forecast and market expectations. Although the US corn yield was slightly better than forecast, traders expect that US corn/soybean yields will decline in October due to dry Central US weather for the past 3 weeks. Chicago values are likely to chop sideways as the harvest begins with combine yield reports being key to daily price direction.
  • NASS estimated the 2024 US September corn yield at a record 183.6 bushels/acre, up 0.5 from August. The IL corn yield fell 3 bushels/acre to 222 while IA was up to a record 212 bushels/acre. The IN corn yield rose to a record 210 bushels/acre. There were 9 US states that produced a record corn yield with ears per acre being down 1.7% from last year at 28,900. It is important to note to note that the record large US corn yield was produced by a record ear weight. This produces downside yield risk in future NASS reports as ear counts tend to seasonally decline.
  • US 2023/24 corn end stocks were reduced by 55 million bu to 1,812 million with 2024/25 corn end stocks dropping 16 million to 2,057 bushels/acre. WASDE made no adjustment to new crop corn demand. The average US corn farmgate corn price was cut by 10 cents/bu to $4.10.

  • US soybean old crop soybean end stocks were dropped 5 million bu based on a like bump in crush to 2,295 million bu which placed stocks at 340 million bu. We note that the new crop US soybean supply fell 8 million bu to 4,941 million with end stocks falling 10 million to 550 million bu. The average farmgate price held steady at $10.80. The modest fall in old and new crop end stocks produced a modest post report rally, but amid large S American harvests, the rally faded. WASDE left its estimate of the 2025 Brazilian soybean crop at a record large 169 million mt with the Argentine soybean crop at 51.0 million mt. China is estimated to import a record 111.5 million mt of soybeans in 2023/24 and 109 million mt in the 2024/25 crop year. Whether it is world or domestic balance sheet changes, the September adjustments were modest, and traders will look to actual harvest yield results and the export demand for price direction. We note that without adverse S American weather, a gradual decline in price is forecast into Q2 2025.
  • NASS/WASDE row crop estimates were uninspiring. Chicago choppiness is forecast to prevail as the harvest advances and farmers hold fast to newly gathered supply. US crush and ethanol grind margins will stay profitable well into yearend.

  • Sep WASDE wheat data is rather dull as very few adjustments were made to US and global production. In fact, the US wheat balance sheet was left completely untouched, even by-class numbers are unchanged. We reiterate that US production is never altered in mid-Sep as NASS’s Small Grains Summary on Sep 30 is awaited. US end stocks remain estimated at 828 million bu, vs. 702 million in 2023/24.
  • 2024/25 world wheat end stocks were increased 600,000 mt, and the increase was largely a function of an upward revision to Canadian beginning stocks, which was known via Stats Can data earlier in the week. 2024/25 world wheat production was lowered 1.4 million mt as a smaller EU harvest (-4 million mt) more than offset higher estimated production in Australia (+2) following ABARES’ estimate in early Sep and Ukraine (+0.7). The Russian balance sheet is unchanged. World wheat trade in 2024/25 was lifted to a near record 216.5 million mt, vs. 214.9 in August, as larger supplies in Australia and Canada will be absorbed by importer demand.
  • Major exporter wheat stocks/use is pegged by WASDE at 13.3%, vs. 13.2% and vs. 2007’s record low of 13.1%. The balance sheet stays tight and key in Oct/Nov is whether larger Aussie output offsets coming downward adjustments to Russian and Kazakhstan spring wheat crop sizes.
  • The Sep WASDE data lacks fresh input. US combine yield data takes priority beginning in late September. US corn yields in Oct are typically changed only slightly, while changes in US soy yield in Oct range from 0.3-0.8 bushels/acre. The next few weeks will be a battle between large US cash supplies at harvest and concerning dryness in S America and the Black Sea region. Choppy/sideways market are forecast though the balance of Sep.

10 September 2024

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  • Chicago soy extends overnight on absence of daily export sales; GFS weather forecast wetter in US Central Plains; Crude down sharply.
  • Chicago ag futures at midday are mixed, with wheat higher and row crops lower. The next two sessions will be defined by adjusting risk ahead of NASS’s corn and soy objective yield data. We expect USDA’s Sep WASDE to be lacking in statistical fireworks, but there is a battle between August dryness, disease pressure, rapid maturation but also above-average crop ratings. We maintain price choppiness is most probable until the US corn and soy harvests reach 20-25% complete. Combine data is critical this year. It is only when soy crop size is better known that a bottom in Chicago soy futures can be confirmed. WTI crude at midday is down $3.10/barrel at $65.60.
  • FAS’s daily reporting system was void of new export demand, which has compounded long liquidation in the soy complex. Weekly soy export sales of 45-50 million bu are needed throughout autumn to validate USDA’s annual 2024/25 US export forecast of 1,850 million bu.
  • We expect soy purchasing from China and others to stay active into the holiday season as Brazilian beans don’t materially compete with US origin until January, but the USDA’s Sep WASDE will act as a reminder that US soy end stocks exceed 550 million bu without S American supply dislocation.
  • Other breaking news is absent. Argentine company Biocere’s HB4 GMO wheat variety won’t be available in the US for at least two years, and then the issue globally is one of consumer preference. This will be a challenge. Algeria is seeking 160,000 mt of optional origin corn for autumn delivery. Wheat cash basis levels in W Europe steady. Cash corn in Ukraine is unchanged. Fresh input is being sought, but it is the USDA’s Sep WASDE that matters most.
  • The midday GFS weather forecast is consistent in keeping S American rainfall into Sep 24 isolated to Rio Grande do Sul and Santa Caterina and southern Parana (25% of soy total production) in far southern Brazil. A pattern of complete dryness persists elsewhere, while abnormal heat stays in place across central and northern Brazil. Max temperatures in Mato Grosso do Sul, Mato Grosso, and Goias will be 100-103 each of the next 10 days, with heat alerts there widespread. The market is rightly not concerned about S American weather today, but there is no doubt a change is needed prior to Oct 1 to facilitate Brazilian soy exports in the second half of January. Wheat in Argentina is most exposed to weather currently.
  • In the US the GFS weather forecast is much wetter across the Central Plains and W Midwest after Sep 18. The GFS forecast projects a sweeping cold front to travel across the W US Sep 18-20, which produces rainfall of 2-4” in OK, E KS, NE, and parts of IA/MN. Confidence in GFS details is low, but there has been consistency in advertising better rain chances across the C Plains in the second half of September. Hurricane Francine’s path is unchanged, with soaking rainfall due in LA, MS, and W TN over the next 72 hours. The E Plains and Great Lakes region stays arid. There are still no signs of frost in the Dakotas/MN.
  • It is a low volume/low input session, with negative macro sentiment spilling into ag markets. Corn and wheat have very likely scored seasonal bottoms, while whether NASS pegs US soy yield above or below 53.5 determines soy complex direction through the balance of September.

9 September 2024

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  • Chicago steady/higher at midday; US sells beans to China; Canadian wheat stocks larger than expected.
  • Chicago ag futures are steady to higher at midday, with soybeans still the leader on additional Chinese pricing, the ongoing absence of rainfall in Central and Northern Brazil in late month, and partly due to questions over USDA’s yield revisions on Thursday. Crop ratings even this afternoon will support a national yield corn yield above 180 and a soybean yield above 53, but the lack of rainfall since Aug 1 across key parts of NE, IA, OH, and the southern Midwest. This places a greater emphasis on combine data beginning late Sep/early Oct. We doubt there will be many statistical fireworks in Thursday’s release, but the market is equally aware of that seasonal price trends transition from bearish to neutral at late summer.
  • Exporters sold another two cargoes of US soybeans to China this morning. We would maintain that while annual US soy exports will be a function of Brazilian production in early 2025, China and others will be active purchasers of US origin between now and the holiday season.
  • Stats Canada pegged 2023/24 Canadian wheat end stocks at 4.6 million mtg, vs. USDA’s estimate in August of just 1.8 million. Higher than expected wheat stocks were a function of upward revision to 2022/23 end stocks, Stats Can is notorious for large retroactive revisions, which were increased from 3.5 to 5.6 million mt.
  • Larger Canadian stocks have most pressured Dec Minneapolis wheat, and assuming no change to US HRS yield, there will be abundance of N American spring wheat available in autumn and early winter.
  • Stats Can pegged 2023/24 canola end stocks at 3.1 million mt, vs. USDA’s projected 2.0. Total domestic consumption and exports were below USDA’s forecast in August, but stocks of 3.1 million mt were largely expected by the Canadian trade. Nov Canadian canola at midday is $11/mt. Unlike wheat, there is concern over 2024 Canadian canola production following bouts of heat this summer.
  • Nov Brazilian corn is up $0.11/bu at $5.11, with the nearby market there trading above $5.00/bu for the first time since March. Brazilian dryness matters little today but will warrant attention in October. And the issue is that short, and medium-term guidance offers no real change from current dryness and incredible heat across key areas of central and northern Brazil. High temperatures this week in southern Mato Grosso and Mato Grosso do Sul will reach 103-105 degrees. We view any sustained heat/dryness in Brazil this autumn as more threatening to corn supply and demand given the precarious nature of safrinha seeding dates and Mar-Apr rainfall.
  • Export inspections included 33 million bu of corn, vs. 38 million the previous week, 13 million bu of soybeans, vs. 18 million the previous week, and 21 million bu of wheat, vs. 22 million the previous week. USDA will increase its 2023/24 US corn export forecast 25-40 million bu, keeps its soy forecast unchanged, and very likely hikes 2024/25 US wheat exports by 15-25 million bu. River levels along the lower Mississippi are a concern, but Gulf loadings have performed normally so far in September.
  • The midday GFS weather forecast is slightly drier in IL/IN, but the overall pattern is consistent. Tropical storm six makes landfall on Wed/Thurs in LA and moves across the Delta and into the TN, KY, and southern Midwest over the following 2-3 days. Rainfall of 2-4” blankets LA, MS, AR, TN, KY, and far southern parts of IL and IN. The remainder of the Corn Belt stays arid into Sep 19. Temperatures warm steadily into late week, peaking in the 80s on Wednesday.
  • Net soil moisture loss continues across the C Plains, W Midwest, and Great Lakes, but a smooth/quick harvest is anticipated. Helpful showers also projected to impact the TX/OK panhandles Sep 18-19, though confidence in details there is low.
  • It is a pre-report short covering session. Seasonal recoveries are typical in all markets between late summer and mid-winter, but the intensity and speed of 2024’s recovery first requires clarity over crop sizes.

6 September 2024

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  • Chicago weaker at midday; Macro markets weigh; GFS weather forecast wet in Delta but drier in S Midwest.
  • It started out as being a macro morning in Chicago with the US September employment report reflecting a step down to 142,000 in job creation (and potential of US Central Bank to cut its fed funds lending rate by 0.5%). The larger rate cut potential spurred commodity fund demand from the macro traders which initially pushed Chicago values higher. Chicago corn/soy pushed to a new weekly high amid the hope for US rate cuts in a decline in the US dollar. The US greenback is in decline, but the US stock market has fallen sharply on the news that has caused a pause in the macro buying of commodities. The midday tone of Chicago grain markets is one of bearishness as the early rally failed.
  • With the US September Jobs report in the rearview mirror, the USDA September Crop Report is next Thursday with traders fearing new record large US corn and soy yields. November soybean futures poked above $10.30 before hedge-related selling emerged from the US/S America farmer. Soybean fundamentals are bearish with the US harvest ahead and record large US soy crop likely. The market must digest large cash supplies nearby before S American weather comes forward. Brazilian dryness is acute, but it is too early to pay much attention until the middle of October. We look for a lower Chicago close amid long liquidation ahead of Thursday’s USDA report.
  • Chicago brokers estimate that funds have bought a net 1,900 contracts of wheat and 4,200 contracts of corn while selling 3,800 contracts of soybeans. In the products, funds have sold 3,200 contracts of soyoil and bought 1,300 soymeal.
  • FAS reported for the week ending August 29 that the US sold 12.5 million bu of wheat, a net 52.5 million bu of soybeans, and 64.9 million bu of corn. For their respective crop years to date, the US has sold 378 million bu of wheat (up 89 million or 31%), 2,196 million bu of corn (up 599 million or 37%), and 1,669 million bu of soybeans (down 294 million or 15%). The US has sold 442 million bu of new crop corn and 434 million bu of new crop soybeans, not including old crop carryover.
  • There is growing concern that Mexico will (again) try to restrict GMO corn imports. The Mexican Senate is debating and will likely pass a bill next week that limits GMO corn imports unless the corn is cracked. The anti GMO platform has been pushed by Mexico’s President Almo as he leaves office on September 30. President Almo and the Congress look to make a final attempt to limit GMO corn imports and help Mexican corn farmers amid low margins.
  • The US would likely push back on any Mexican GMO corn import ban through existing trade agreements. Yet, Mexico keeps reminding the US to stay out of its sovereignty. Mexico needs large US corn imports due to a 2.5-year drought, but a political fight could produce upheaval in corn trade. Importing large tonnages of US cracked corn does not work due to dust and storage difficulty for Mexican end users. Be aware of the potential headlines that might emerge regarding Mexico and US GMO corn.
  • The midday GFS weather forecast is much wetter across the Delta region as an organised tropical storm is forecast to make landfall in TX/LA next Wed/Thurs and move into AR/W TN during the second half of next week. Rainfall of 3-6” favours LA, AR, and MS. Elsewhere dryness and variable temperatures persist for another 10 days. Chilly overnight readings are probable across the E Midwest this weekend, though no frost is indicated. Abnormal warmth blankets the whole of the Central US Sep 10-18, with highs in the 80s to be widespread. Highs in the 90s will favour the Central Plains. Rain will be needed across the HRW Belt by mid-autumn.
  • It is a day of profit taking and pre-weekend hedge pressure. Bottoms in wheat and corn are scored typically in the first week of September, but recoveries are rather back and forth until October. The soy market stays tied to USDA yield forecast into NASS’s October report. Be prepared for choppiness/volatility during the remainder of September. The complete absence of water in Central/Northern Brazil grabs more attention after the next 2-3 weeks.
To download our weekly update as a PDF file please click on the link below:

5 September 2024

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  • Chicago weaker at midday with dry weather forecasts supporting soybeans; Black Sea FOB wheat unmoved; GFS forecast dry for the Midwest.
  • It has been a red morning in Chicago with corn, soybean, and wheat futures lower. The oil share spread is gaining, with soymeal retreating from recent day gains as oilseed workers appear to be in a deal with crushers. Large US corn/soy yields are being reported by private analytical firms with the September USDA Crop report just a week away. This is the first actual survey report from NASS and a record large US soybean yield/crop is anticipated. Wheat futures are in decline as Black Sea cash wheat markets are unmoved by the recent Chicago/Paris rally. Russian fob wheat ended the day at $217/mt, the same price as late August. Russia exported a record 5.0 million mt plus of wheat during August with similar large exports to occur in September.
  • The USDA reported that China booked 126,000 mt of US soybeans with 189,700 mt sold to unknown destination. This helps confirm that China booked 5-8 cargoes of US soybeans on Tuesday. We understand that China continues to seek and book US soybeans on a daily basis. Note that the weekly USDA/FAS export sales report will be released on Friday due to the Monday Labor Day holiday. Another week of large US corn/soybean sales are expected.
  • US corn and soybean crop maturity is being pushed by the dry/sunny/mild September weather with corn harvest to start in earnest by the end of next week. Farmers had hoped that the 2024 corn crop would dry down quickly, and that is what is occurring. Should the dry weather last for another 2 weeks, the Southern and Central US corn harvest could be in full swing by September 21. The market is sensing harvest hedge pressure starting this weekend. The soybean crop is also maturing quickly with the harvest in April planted beans to commence in late September.
  • The Brazilian Senate approved a bill yesterday that would create an expanding national program for green fuels into early 2030. The Fuels of the Future Bill was overwhelmingly approved by the Brazilian Senate with the amount of soyoil to be blended into Brazil’s diesel supply to rise 1% each year until it reaches 20% by 2030. This would be a massive increase in Brazil’s domestic soyoil use in the years ahead. Currently, Brazil is blending 14% of its diesel supply with soyoil and the country may have to import Argentine soyoil to meet its domestic 2024 mandate before the new 2025 harvest.
  • The Fuels of the Future Bill also set Brazil’s ethanol percentage in gasoline to reach 27% and vary within a range of 22-35%. Currently, only 18% of Brazil’s gasoline supply is blended with ethanol. Brazil is pushing to dramatically increase its blend of green fuels into its domestic fuel supply which would aid its farmers. The Fuels of the Future Bill requires passage in the Lower House and signature by the president before it becomes law. It is important legislation to follow for world agriculture.
  • Canadian canola futures are bouncing as it is possible that China could import its canola into yearend. However, Chinese importers would likely have to get government approval to make sure it did not fall foul of China’s trade intentions. If history is a lesson, it is feared that Canada/China trade dispute will take years to resolve which is unnerving for Canadian farm income.
  • The midday GFS weather forecast is unchanged with dry and warming temperatures forecast for the next 10 days. Topical activity soaks parts of the Southeast and Florida, but a lengthy period of dryness and normal/above normal temperatures is forecast for the Central US. Highs in the 80s will be widespread across the Midwest with 90’s across the Plains next week.
  • Chicago traders will be looking forward to the USDA September Report in 5 trading days and the onset of the 2024 Midwest corn harvest. Black Sea wheat prices are well below the US/European offers and are gathering world demand. S American corn premiums are in retreat as the Brazilian Real stays weak which is sparking farmer selling. Central US dryness is a supportive Chicago price feature. The sharp decline in Chicago grain open interest speaks of sizeable short covering in recent days.