CBOT Slightly Higher Awaiting USDA Report

Oct 12, 6:13 am | Morning Commentary | Share this:

** AgResource AM Grain & Oilseed Comment: Good Morning! The CBOT has been in recovery overnight as it prepares for the USDA October Crop Report at 11:00 AM CDT this AM. Pre-report positioning has been featured.

  Traders have a bearish lean heading into the report expecting a bump higher in US corn and soybean yields, and an upward adjustment of 300-400,000 acres of soybeans and a downward adjustment of 200-400,000 acres of corn. Farm Service Agency (FSA) farm program participation data will be incorporated into the NASS Seeding Survey.

  The volume of overnight CBOT trade has been modest with just over 9,000 contracts of November soybeans and December corn, and over 3,600 contracts of December Chi wheat changing hands.    

  Wednesday’s CBOT open interest reflected a 13,722 contract rise in corn, a 7,123 contract gain in soybeans, and a 8,984 contract gain in wheat. Fund managers have piled into additional net short grain positions ahead of the USDA report expecting lower prices.

The Chinese Agricultural Ministry lowered their estimate of China’s 2017 corn harvest to 210.1 MMTs, down from 212.50 MMTs in September due to reduced seeded area. The Chinese MOA further raised corn consumption (ethanol) to  215.6 MMTs (up 1.0 MMTs), leaving China’s corn end stocks to decline 4.3 MMTs. China does not provide exact estimates of their grain or soy stocks. Also, China raised their ‘17 soy crop estimate by 200,000 MTs to 14.9 MMTs. 

  The high pressure dome that has been blocking rainfall across N Brazil shows no sign of breaking down with some strengthening forecast during the 11-15 day period. The Ridge across N Brazil shoves the jet stream southward leading to flooding rains across RGDS and Santa Caterina amid frequent and strong storm systems. This is a “winter like” Brazilian weather pattern with extreme heat (highs ranging from 95-106 degrees) that will rapidly extract soil moisture across N Brazil. This pattern looks to persist into November.

  Argentina will also see below normal rains across the heart of its crop area, but temps will not be extreme with highs ranging from the 60’s/70s/80s.

  The Central US forecast calls for additional showers across the Lake States from late Friday into the weekend with clearing/warming weather next week. A few regional harvest delays will be noted, but no enduring mud is foreseen.

  In world ag markets, Malaysian palmoil closed 14 ringgits higher at $2,710 RM/MT while Paris wheat is unchanged at $161.75 euros/MT. Dalian corn and soybean futures closed mixed in sagging volume.

  Pre Report positioning will be featured at the CBOT this AM with the USDA report to set the stage for today’s CBOT close. US corn and soy yields will be all about ear and pod weights. South American weather concerns are real, and should offer support following the USDA report data release. 

** 10 Day South American Rainfall Forecast: 

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