Look for trade this week to be sideways ahead of the USDA supply/demand and crop production report this Thursday October 11th.
The big news this week was the surprise development of the U.S. and Canada NAFTA accord. This was positive news on the corn board as Mexico is a huge importer of US corn. Look for an official signing to take place in late November on this deal with US, Mexico, and Canada. Brazil’s first 18-19 corn crop is 33% planted vs 23% last year. Harvest progress in the US is ahead of schedule at 26% harvested. Harvest pace will slow as the remnants of the tropical storms will wet the heart of the country this week, keeping combines out of the field. There have been reports of farmers leaving corn standing and harvesting the beans as soybean quality issues pressure harvest. President Trump is tentatively scheduled to announce a possible policy change that will allow E15 ethanol blend to be sold year round at a campaign event in Iowa on Tuesday. Corn export sales remain strong, higher than the previous 4 years in this early marketing year. There remains opportunity in the market to price corn above the $4 mark for the 2019 and 2020 crop year – it is not too early to get started!!
Soybeans have had a very supportive week with forecasts calling for wet weather across most of the Midwest, with ranges up to 7 inches in some places. Traders see this weather threat as a positive force for prices until harvest pace can pick back up. Informa revised their soybean yield estimate from 52.8 bushels to 53.0 bushels per acre for the US. Yield reports will continue to be monitored as harvest progresses. Brazil’s 18-19 soybean crop is estimated 4.6% planted vs 1.5% last year, but also an increase in acres of 3.8% from last year. Export sales were surprisingly high this week at 1.52 million tons, the highest number since April. This is the time of year that China typically turns to rely on the US for soybeans as South America is in the middle of planting. Analysts have mixed reviews as to whether there are enough other global stocks to hold China over until the first crop of South American soybeans will be harvested.
Winter wheat planting is ahead of the 5 year average at 43% planted. Australia had the driest September ever on record. There is some rain in the near forecast of eastern Australia but is believed it will offer very little relief from the prolonged drought. The driver in the market on the tail end of this week was FC Stone’s prediction of Australian wheat production at 16.4 million tons vs the government prediction of 19.1 million tons. Russia will close several export facilities in an effort to correct phytosanitary violations to improve the quality of their wheat exports. Russia has submitted samples of wheat to Algeria in hopes to gain registration access to Algeria by the end of 2018. Egypt tendered for wheat again this week with a whopping 17 offers submitted – there is definitely not a shortage of wheat in the world. No surprise that there were no US wheat offers to Egypt, as US wheat prices remain too high for the global market.
The market has struggled to find any kind of momentum on the tail end of this oversold market as we see the second week in a row back below 80 cents. India cotton production could be much lower than expected given the lack of rain in the key growing regions, but have not seen any newer estimates just yet. December cotton closed at its lowest level since February 20th one day this past week, but even the lower drop in prices has still failed to attract better export demand. The weekly export sales report was very negative with China canceling a sale of 85,900 bales. Sales for this time of the year generally run 150,000 to 350,000 bales per week. This past week’s report was 112,900 bales (21,800 old crop and 91,100 new crop). With 2.5 to 9 inches of rain expected this week across the Texas panhandle, this oversold market should be vulnerable to at least a temporary recovery bounce.