Written Commentary
MORNING AG OUTLOOK
SOYBEANS:
November beans closed near the highs the day yesterday for the 2nd day in a row and have made a higher daily low for 7 of the last 8 trading sessions. Buying has surfaced on minor pullbacks this week, likely due to the very dry finish for the crop across the Midwest and an uptick in demand. Yesterday’s Drought Monitor showed significant increases in drought conditions in the eastern corn belt, especially Ohio, the Delta states and southern Plains. Very little rain is forecast for the next 10 days for the Midwest. Temperatures will be warming next week. The dry finish to the growing season may pull yields down slightly but is also speeding the crop to maturity. Freight rates are surging as towing and draft restrictions go into effect due to low River levels and that is likely to worsen with the current forecast. There were 65 bean deliveries overnight and 100 bean oil. Brazil’s bean exports in August were 8.042 million tonnes, compared to 8.387 year ago. USDA announced new sales of 189,700 tonnes to Unknown and 126,000 tonnes to China yesterday morning. With Chinese crush margins finally improving, after negative profitability since June, China purchases of US beans are likely to continue in the near-term. Weekly export sales this morning are expected in a range of 800,000-2,000,000 tonnes, meal 150,000-550,000, and bean oil 0-10,000.
CORN:
Corn is set for another weekly gain, which will confirm last week’s reversal higher and keep the technical picture positive. US harvest is dead ahead, but late-season heat/dryness may be pulling yields down slightly and crop size ideas are no longer rising. The 1-5 day forecast is nearly completely dry for the Midwest and the 6 to 10 features below normal precipitation for the eastern belt and above normal temperatures moving in across most of the crop areas. Barge transportation looks like it’s going to be an issue at least for the 1st part of harvest and the lack of precipitation in the forecast will worsen the draft restrictions. The Buenos Aries Grain Exchange says Argentine corn harvest is now complete. The UN Food and Agriculture Organization lowered global cereals production by 2.8 million tonnes to 2.851 billion tonnes. Brazil’s August corn exports reached 6.063 million tonnes, compared to 9.363 in August a year ago. Weekly export sales today are expected in a range of 700,000-1,400,000 tonnes. US prices are near parity with South American and Ukraine levels.
WHEAT:
Although wheat prices pulled back slightly yesterday, barring a meltdown today, prices will see another strong weekly close and confirm last week’s reversal higher. Russia’s Ag Minister says a state of emergency is in effect in the agricultural region of Tomsk due to crop problems and the order will allow farmers to apply for government assistance. Russian cash prices have not followed US prices higher this week, which is a bit of a disappointment and may limit how far the current futures rally can run. The Buenos Aries Grain Exchange says dryness is returning to Argentine wheat areas after recent showers. French harvest sampling shows a slight improvement in test weights but still only 28% of the crop meets common test weight standards. Only 74% of the samples had protein levels above 11%, compared to 85% average. Winter wheat area under drought in the US jumped 5% this week to 52% and is now above last year’s level of 46%. Drought conditions have increased significantly in the Plains recently. Weekly export sales today are expected in a range of 300,000-600,000 tonnes. Chicago December wheat is expected to confirm last week’s weekly reversal today and that significantly raises the odds a market bottom has been seen.
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