CBOT Advances On South American Weather and the Midwest Yield Debate

Sep 14, 6:48 am | Morning Commentary | Share this:

 ** 6:30 AM CDT CBOT Prices: Nov soybeans are up 5.25 cents at $9.6525, Dec corn is up 2.50 cents at $3.54 while Dec Chi wheat is up 3.75 cents at 4.4675.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! The overnight CBOT trade has been mostly firmer in declining volume. Soybeans and wheat have been the bullish stalwarts, with corn in tow. Overnight CBOT trading volume has exceeded 10,000 contracts of November soybeans, and over 9,000 contracts of December corn and over 6,000 contracts of December Chi wheat. 

  Preliminary CBOT open interest for Wednesday reflects a 2,771 contract gain in corn, a 5,388 contract gain in soybeans, and 2,858 contract bump in Chi wheat. Ahead of the harvest, CBOT grain open interest is expanding.

  Deliveries against September futures were; 115 contracts of soymeal, 316 contracts of soyoil, 87 contracts of corn, and 4 contracts of Chi and 19 contracts of KC wheat. No soybeans or oats were tendered.  

   Argentine’s Rosario Grain Exchange raised their estimate of the 2016/17 corn harvest to 41 MMTs from 38 MMTs, and cut their soybean crop estimate to 54.5 MMTs vs a prior estimate of 57.3 MMTs. Most private estimates of 2017 Argentine soy production are in decline which could help explain the reduced sales pace of cash soybeans in recent weeks.

  The Rosario Exchange estimates 2017/18 corn and wheat seeding at 6.2 Mil HA and 5.4 Mil HA, respectfully. Both are up slightly from last year.

Mostly dry weather will persist across the Midwest for another 2-3 days with the rain chances increasing in the N Plains and W Midwest by the weekend and early next week. There is not a lot of moisture for the E Midwest with crop “die down” accelerating. We use the term die since IL/IA and IN crops are just running out of soil moisture and prematurely dying. There is no evidence of a frost/freeze into October 1st and a cold event thereafter will be meaningless.

  South American weather gains importance with soybean seeding underway across N Brazil and wet weather causing corn/soy planting concerns in Argentina. There is no evidence of any moisture for Brazilian crop areas north of RGDS, with dryness becoming an increasing worry. And N and E Argentina will see more unwanted heavy rains in the 7-15 day period with totals of 1-3.00”. The South American weather pattern is stable and looks to be stuck into early October.

  The Australian weather forecast features limited rainfall for key wheat areas for another 10-12 days. Aussie small grain crops are in need of rain as they reach the reproductive phase with short soil moisture. The good news is that temps hold at near to below normal levels.

  FAS will be out this AM with weekly US export sales data. US soybean sales are expected to exceed 1.5 MMTs on continued strong demand.

  A new phase in the market is approaching as traders listen to the combine – actual yield data. Some very early harvest data is coming in and it does not appear to back up lofty NASS yield forecasts. However, it’s too early with too limited of data to suggest an actual US yield trend.

  Harvested Midwest yield data and South American weather will drive CBOT price direction into the October NASS/WASDE report. Our advice to clients is to await strong rallies for sales opportunities as seasonal lows are forged.

** 10 Day EU Model South American Rainfall Forecast: