Soybeans Hold Onto a Moderate Gain; Wheat, Corn Weaken

CME GLOBEX RECAP:

December corn is down 1 1/4, November soybeans are up 1 3/4. December KC wheat is down 2 1/2, Dec Chicago wheat is down 2 3/4, and December MIAX Minneapolis wheat is down .0050. 

OUTSIDE MARKETS:

December corn is down 1 1/4, November soybeans are up 1 3/4. December KC wheat is down 2 1/2, Dec Chicago wheat is down 2 3/4, and December MIAX Minneapolis wheat is down .0050. The Dow Jones Industrials Index rose 516 points on Monday and Dow futures are down 2 points early Tuesday. November crude oil is up 75 cents per barrel. The U.S. Dollar Index is up .373 and November gold is down $133.50 an ounce.

CORN:

December corn is attempting to finish higher for a sixth straight day but is down a penny early Tuesday. The corn harvest is estimated to be from 55% to 60% completed, but that’s only a guess in the absence of the weekly Crop Progress report. Weekend rain surely slowed Eastern Corn Belt activity. Early Tuesday a system is working through the Great Lakes and in the north-central U.S. winds are strong. Ag Rural reports Brazil’s first season corn planting has now reached 51% done compared to 48% one year ago, and weather continues to be favorable for both Brazil and Argentina. Corn export inspections continue to reflect solid demand with inspections now 61% higher than last year at 368 million bushels (mb). The Economic Adviser to the White House is predicting that the third longest government shutdown is likely to end this week. The Trump administration’s trade representatives will meet with China counterparts in Malaysia this week and hopes are high for some sort of deal. A negative development is word that the American Petroleum Institute has come out against the E-15 change in the U.S. While December corn is still trading above all key moving averages early Tuesday it is less than a penny above the 100-day average. Funds remain net-short an estimated 109,000 contracts of corn. In overnight business, South Korea bought 67,000 metric tons (mt) of optional origin corn for December-January and that is likely to be from South America or South Africa. On a positive note, Danish shipping giant Maersk is said to be experimenting with a blend of 10% ethanol in its fuel and reports are that if successful this would add 50 billion liters of ethanol demand. The other side of the coin is that it is likely to be from Brazil. DTN’s National Corn Index closed at $3.83 and 40 cents below the December contract.

SOYBEANS:

November soybeans are on the cusp of a fifth consecutive higher finish as traders feel more optimistic about a possible trade deal with China. President Trump has urged China to buy U.S. soybeans and Trump trade representatives are slated to meet Chinese counterparts in Malaysia this week. That is ahead of next week’s proposed Trump-Xi meeting in South Korea. The soybean harvest is estimated to be nearing 75% complete. Soybean meal is attempting a sixth straight higher close but is unchanged while bean oil is again weaker. The U.S. is in need of a soybean-specific trade deal with China as China has bought zero new-crop beans from the U.S. and zero for the month of September compared to 1.7 million metric tons (mmt) a year ago. They have taken 30% more soybeans from Brazil in September than a year ago. That is the first time in the past seven years the U.S. has been without sales to China. China for September, bought the second most ever at 12.9 mmt, with 10.9 mmt of that from Brazil. In Brazil, seeding is moving ahead with Ag Rural reporting 24% of the crop has been planted, with major producer Mato Grosso now 44% done and 8 percentage points faster than average. Unlike corn, soybean inspections are predictably lagging at just 203 mb and more than 90 mb lower than last year. On an even more troublesome note, a rumor floating around has China about to start auctioning off their own reserves as the trade battle with the U.S. extends. We will have to wait and see if the optimism reflected in the futures the last few days was warranted. In the absence of a China deal we will see exports fall and carryout rise. Funds are short 16,000 beans and an estimated 95,000 contracts of soymeal. Keep an eye on November with a fall below the 50-day and 100-day averages at $10.29 and $10.26 likely a bearish omen. DTN’s National Soybean Index closed at $9.58 with a soybean basis of 74 under the November futures.

WHEAT:

The wheat markets are weaker early Tuesday with the MIAX Minneapolis contract again falling to a new contract low. It seems each day another major exporter raises their production. On Monday, consultancy IKAR raised Russian wheat production from 87.5 mmt to 88 mmt. A group of five analysts in a survey raised Australian wheat production to 35.7 mmt and the third largest ever, while some private analysts see the crop as high as 36.5 mmt. Favorable weather conditions are also ahead for Argentina’s wheat crop which has already been raised to a record large 23 mmt. Despite all of that, U.S. wheat inspections have been a pleasant surprise year-to-date with 411 mb already shipped compared to 342 mb a year ago. On announced tenders, Jordan will be in for milling wheat and Algeria has announced a tender for optional milling wheat. Wheat continues to be oversold and especially Minneapolis. Funds remain net-short wheat, with the Chicago short estimated to be 106,000 contracts. DTN’s National HRW Index closed at $4.20 and 70 under the December futures board.

Dana Mantini can be reached at Dana.Mantini@dtn.com