Grain and oilseed trade was disappointing yesterday because we were coming off of two days of solid upward price movement in corn and soybeans and then a very abrupt halt to the active buying. Prices didn’t set back much, but there was solid red ink across everything at the finish. In soybeans, the 8 am daily export announcements yesterday included a 464k mt sale of US soybeans to China, which is obviously bullish news, but it got zero following when the market opened for the day trade. Corn, beans and KC wheat were all in the 4-5 lower range at the finish. Chicago wheat was knocking at the door of 10 lower. MGEX was down around 3c across most contracts. Following Monday’s hard bull run higher after the friendly Quarterly Stocks report reaction, this was the first day of legitimate pressure on prices. From a technical perspective, it was also unfortunate that it came on the heels of Dec Corn filling a gap on the charts and then abruptly turning lower. Not a good sign and it would have been much healthier if corn could have pushed straight past the gap and extended the gains. That turnaround leaves the market on shaky ground.
Funds were estimated sellers of 4k wheat, 10k corn and 4k beans.
Two other noteworthy news items from yesterday; Egypt’s latest wheat tender resulted in just one cargo being purchased. It was French wheat and not Black Sea origin this time. They paid $219.35/tonne landed. There weren’t any US offers, but to give you an idea of whether we could have been competitive, SRW wheat would have landed at around $249/mt and HRW at $232. Not good…. The second news tidbit was FC Stone putting out their latest yield forecasts ahead of the coming October Crop Report. They raised their corn yield estimate 1.1 bu, up to 169.3 and beans up .2 to 48.1 bu/ac.
Weekly export sales in the grains were solidly bullish for soybeans this week, but solidly bearish for corn and wheat. Soybean sales were 76.3 mln bushels, which is a great weekly number, but it only brings the cumulative total for the marketing year up to 525 mln bushels and that’s 214 mln less than last year at the same time. Corn sales were 22.1 mln bushels, bringing the marketing year total up to 382 mln. That’s less than half what the pace was last year at the same time. Wheat sales were a paltry 12.1 mln bushels, which is about half what it would take to be bullish. However, the cumulative pace for the marketing year is 474 mln bushels, which is still solidly ahead of last year’s 414.5 mln pace on the same date. That’s friendly for wheat, yet if the sales pace continues in the low double digits like we got this week, it will get ugly very quickly for the wheat market. As a side note, milo sales were zero this week and I don’t think that needs a call for whether it’s bullish or bearish.
The top three buyer’s in wheat in the numbers this week were the Philippines, Japan and Brazil. Top corn buyers were Mexico, Japan and Canada. Top three for soybeans were China, the Netherlands and Indonesia and China took over 75% of the total, which was great to see obviously.
6-10’s last night showed a small circle of below normal temps for eastern Oklahoma, southern Missouri and all of Arkansas. Surrounding that was normal temps through central Oklahoma and Kansas, the central and eastern Corn Belt. From the Panhandle up through the High Plains, all of the Northern Plains and Minnesota it was above normal temps. Precip was below normal throughout all of the Plains and Corn Belt. Not a good forecast for favorable seed conditions in the areas of HRW wheat country that missed rains in the last week. Very favorable forecast for harvest progress in the Corn Belt. I’d view it as a little bearish for corn and soybeans with the warmer temps in northern areas and dry harvest conditions.
8am daily export announcements had an interesting twist. China bought 130k tonnes of US white wheat, which was the oddball. They also bought 252k mt’s of US soybeans.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com