COMMENTARY 9/22/17

Sharply drier (and warmer) weather is forecast for the E, allowing corn/bean harvesting and SRW wheat planting to get rolling in the Delta and SE portion of the Corn Belt.  Widespread rain in much of Brazil from late next week forward will be the start of the “rainy season”.  Argentina also looks to get rain, but not for another week in wettest wheat areas.

CORN

UP 3

Low water, harvest starting, and short covering. An early am freight spike took basis lower yet as as the hot/dry weather is helping corn dry down.  Many are surprised at how wet theirs is once they get into it!  Some in the export market are saying Brazil corn is not AS competitive as that of US.  Crop ratings on Mon are thought to be steady at 61% G/E, 13 points below a year ago to a 2 point decline. Harvest is thought to be 14-15%, vs 7% last week and 5 yr ave of 17%.  THERE IS MUCH MOTIVATION TO HOLD  BU’S OFF THE MARKET by any (most) means possible.

Bloomberg Trader Bias:  Bullish 29% (19% LW), Bearish 35% (29% LW), Neutral 35% (52% LW)

 

BEANS

UP 13

Today’s rally looked to be technical with Nov futures trading above the 200 day moving average. Strong meal buying also helped to support the complex with talk of Chinese pricings. China will be on holiday from 9/29 to 10/9 which could increase coverage now through next week before going away. Yet another 190KMT sale to Mexico was announced this morning making the week’s total announced sales at 1.414 MMT or almost 52 mill bu. Basis got the snot slapped out of it again today with barge freight firming hard due to low water and logistic issues. Cost in some areas has increased over 25 cents this week  and cif has not been overcoming the freight hikes (at least not yet).  Yields are still all over the place but in general, the early planted beans are doing better than expected.  There is some talk that protein levels are on the lower side in the E and will be something to keep an eye on if meal protein levels can’t make deliverable contract specs.

 

WHEAT

DOWN  3

Quiet.  Heavy rain for the Plains for the next five days helping to increase soil moist for HRW emergence.  Between dryness and insect pressure, S HRW planting has been delayed. At some point, low prices do cure low prices.