Written Commentary
MORNING AG OUTLOOK
SOYBEANS
This week trader focus will be dominated by the September USDA supply demand report Thursday morning and further long liquidation is expected, following Friday’s reversal lower. The report will put the emphasis back on the burdensome US carryout and without significant increases to the demand side of the balance sheet, which are not expected in this report, yield numbers will be the important market mover. Actual field samples are used for this report, but forecasting yield at this stage of the growing season can still be difficult. CFTC data showed Managed Money reduced their net long in beans by 23,000 contracts, dropping to a two-month low of 154,000 net shorts, as of Tuesday of last week. Funds added 18,000 meal contracts, increasing the net meal long to 23,000 contracts, a 4-week high. The bean oil net short was 47,000 contracts, which was a 21,000 contracts reduction and a 6-week low. There were 65 bean deliveries overnight and 100 meal.
CORN
Like beans, corn also got a reversal lower Friday and the recent rally may be ready to pull back. December corn had bounced a little over $0.30 over the last 10 days. Thursday’s upcoming September USDA supply/demand report will include actual field surveys for corn and should give a more accurate representation of the crop than the August report. After Census Bureau export data last week, USDA may consider raising their bean export figure. CFTC data showed funds hold about half of the record net short position they held back in July, but it is still the second-largest net short in history for this week. Over the last 3 weeks, the eastern corn belt has been very dry, especially across Indiana, Ohio, Tennessee and even Iowa. The eastern crop areas are expected to remain dry through the next 10 days with rains slated for the Delta areas as a tropical system moves into the Gulf. The precipitation is expected to reach as far north as southern Illinois and may help raise River levels on the lower Mississippi. The 6 to 10 day has above normal precipitation moving into the western belt and normal to below in the East, although there are hints of better precipitation in week 2 in the East.
WHEAT
Prices are starting the week mostly steady after CFTC data showed Managed Money had their largest round of short covering in grains in 4 months. IKAR lowered their Russian wheat crop production estimate to 82.2 million tonnes down from 83.8 in their previous forecast and Russian exports were lowered 500,000 tonnes to 44 million tonnes. Egypt’s supply Minister says they are still seeking 3.5 million tonnes of the 3.8 million tonnes tender back in August. Private weather forecasters say 60% of Black Sea wheat seeding has been hampered by dryness. Ukrainian millers want the government to impose export curbs after the recent harvest included more feed wheat than usual. StoneX estimated Brazil’s wheat crop at 8.09 million tonnes, down from 8.43 in their previous forecast. Stats Canada will be out later today with All Wheat ending stocks expected at 3.555 million tonnes, up from 3.512 last year. Chicago wheat open interest fell again as funds exit shorts, but the upcoming September 12 USDA supply/demand report will put the spotlight on the high US carryout and may result in a short-term pullback.
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