10/16/18

Morning Commentary - 10/16/2018

CBOT Gives Back Some of Monday's Gains; China Unlikely to Secure Additional US Soybeans

** 6:30 AM CDT CBOT Prices: Nov soybeans are down 6.50 cents at $8.85, Dec corn is down 1.5 cents at $3.7675 and Dec Chi wheat is steady at $5.25.

   ** AgResource AM Grain & Oilseed Comment: Good Morning! Mixed to slightly lower in the summer row crops has been the CBOT overnight. Soybeans and corn have sagged on news that 38% & 39% of the US crop is harvested, respectfully. Wheat futures held steadier on rising world fob prices and chart-based considerations. ARC looks for a 2-sided CBOT trading session as corn/soybeans give back some of Monday’s sharp gains, while US wheat futures gain.

  There was much talk in CBOT markets Monday that China was returning for US soybeans based on 5 Mil Bu being exported last week. However, those exports were from old sales make back in May to SinoGrain, a state China importer.

  There is no evidence that China has altered its policy of US soybean avoidance due to the expanding US/China trade war. China’s state importer SinoGrain is expected to ship old purchases long on the books which amounts to just under 2 MMTs. Allowing others to purchase/import US soybeans is unlikely. President Trump is expected to raise tariffs against China following the Midterm US election to pressure China to cut a deal before the G-20 summit.

  NASS soybean crop conditions fell 2% in the GD/EX category to 66% via too much rain in the W Midwest, declining quality aspects of soybeans, and the damage from hurricane Michael. US corn GD/EX ratings held steady at 68%.

  The Central US weather forecast calls for improving harvest conditions with bone-dry weather for the N Plains and the W Midwest for the next 10-12 days.

The coldest temps will be in the next few days before milder readings return. ARC expects that the Midwest harvest will turn active late this week as soils firm enough to support heavy harvest machinery. Harvest hedge pressure returns

  The European/Black Sea weather forecast is arid for another 10-12 days with the hint of rain during the 13-15 day period. Our confidence in moisture that far out is low, but rain is in immediate need for just seeded winter grains.

  The DOW is expected to open 100 points higher with the US dollar weaker this AM. WTI crude oil futures are slightly lower as US/Saudi tensions ease.

  CBOT open interest fell 13,438 contracts in corn but rose 2,422 contracts in soybeans and 1,876 contracts in Chi wheat. The rise in soybean and wheat open interest was a surprise relative to their big rallies Monday.

  ARC maintains a bullish outlook on US wheat. However, future upside in the corn/soy markets appears limited without a South American weather problem. Currently, Brazilian farmers are seeding their soy crop at a record fast pace.

** Limited Rains in Europe/Black Sea Next 10-12 Days; Favorable South American Weather: 

 

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