** Mixed has been the morning with the grains under pressure while soybeans/ soymeal are strong on Chinese demand. Chinese cash soymeal prices rallied to start the week on active pricing by livestock feeders and other end users. Oil/meal profit taking has also been featured as Friday’s CoT report reflected record large fund managed long soyoil position. The cash soyoil market continues to strengthen on basis, but futures have become overbought.
The August NOPA report confirmed record large domestic soyoil demand (we attribute to enlarged US biofuel demand following retroactive import duties) which continue to tug US soyoil stocks lower. Futures markets can correct overbought conditions either by a correction in price or sideways trade. Our lean is to the former with EPA/Trump Administration showing no willingness to change existing mandates, and a court providing background pressure on whether prior mandates should be met? ARC doubts that either EPA/Trump Administration will be changing biofuel mandates for 2018.
** CBOT floor brokers report that funds have sold 4,300 contracts of corn and 3,200 contracts of wheat, while buying a net 2,100 contracts of soybeans. Funds were early sellers of 2,000 contracts of soybeans. In soy products, funds have bought 2,100 contracts of soymeal and sold 3,500 contracts of oil.
** FAS reported that China purchased 261,000 MTs of US soybeans for the current crop year with 126,000 MTs sold to unknown.
** US weekly export inspections for the week ending September 14th were: 26.5 Mil Bu of corn, 17.0 Mil Bu of wheat, and 34.1 Mil Bu of soybeans. For their respective crop years to date, the US has exported 53.2 Mil Bu of corn (down 62 Mil Bu or 54%), 74.7 Mil Bu of soybeans (up 4.4 Mil Bu or 1%), while US wheat export stand at 320.4 Mil Bu (up 5.4 Mil Bu or 1.5%). US corn, soybean and wheat exports were slightly under trade expectations.
** Maria was upgraded to a Cat 3 Hurricane this morning and its track is slightly farther west. The storm is expected to maintain its Cat 3 strength, but the models are debating as to whether the storm will track far enough to west to reach the Carolinas.
** Dryness remains an issue across N Brazil with 2 significant storms to impact the crop areas of Argentina in the next 10 days. The extended GFS weather model hints at better rain chances in the 11-15 day period, but the often more correct EU model offers limited change from the current pattern. Brazilian farmers are concerned about the prevailing dryness as to how it will impact their winter corn seeding dates?
** The 200 day moving average crosses at $9.795 in November soybeans – key resistance. A close above $9.80 November will produce a $10.20 upside target.
** Midday GFS Weather Model Forecast Update: Rains will persist across NW corner of the Midwest amid a stuck Ridge/Trough pattern across North America. .5-2.50” of rain looks to drop across MN, NE and portions of IA over the next 10 days. The very dry E Midwest will continue to dry down crops with some producers noting premature death. Through Sept 28th, there just is not much indication of rains for the E Midwest. Temps average above to much above normal with highs in the 80’s to lower 90’s this week.
Hurricane Jose looks to make a near miss on the eastern US shorline with winds at a modest 75 MPH. Hurricane Maria is farther east and is foreacst to make a near landfall in North Carolina as a Cat 3 storm. Maria then backs up and heads NE into the Atlantic.
** AgResource Market Comment: There just is not enough harvest yield data to determine a trend. Hot/dry weather across the E Midwest should allow for harvest to expand by late week. Following last week’s upside reversal, a close above $9.80 November would turn the price trends upward. The meager volume of CBOT trade has few wanting to take new positions. N Brazilian weather forecasts remain parched into Oct 4th.
