Morning Highlights


 

Highlights

  • Hurricane Florence, now a category 2, appears headed to the coast of North/South Carolina with landfall expected late today or early tomorrow.

  • Energy markets are weaker as downgraded Florence spins toward the east coast. The US$ is slightly higher and DOW futures are firm. 

Corn

  • The corn market sees relatively light overnight trade volumes, trying to rebound after losses yesterday caused by the surprisingly big USDA yield projection.  As expected the US yield was the primary focus on yesterday’s report with 181.3 bpa estimated. Record ear weights and ear counts were noted.

  • Projected US carryout of 1.774 billion projects continuing strong demand as total demand rose to absorb some of the production increase, though the stronger ethanol and feed demand are suspect.

  • Both the CU and CZ contracts have their contract lows looming below, as CU heads into expiration. So far CZ has held above $3.50.

  • Weekly export sales estimate: 800 tmt to 1.2 mmt.

  • Deliveries of 146 contracts overnight against the CU.

  • Spreads trade is quiet: Z/H last trading at a 12 ¼ cent carry and Z/K at a 20 ¾ cent carry. 

Outlook:  Slightly higher with no fresh news as the market continues to debate yesterday record corn yield. 

Oilseeds

  • The soybean market is mostly lower in overnight trading, though well off yesterday’s fresh contract lows.

  • USDA printed the largest US soybean carryout on record at 845mb for 18/19, well above the 06/07 carryout of 574mb and last year’s 395mb with the fundamental outlook continuing to be negative.

  • Talk that the US is expecting to talk with China about resuming trade talks offers some support but ultimately the US is far from normal trade relations with the world largest soybean demand.

  • US soy yield could increase again in future reports as yields on earliest harvested fields lead to ideas that full season bean varieties could perform quite well.

  • Though China revised its 2018/19 soybean imports forecast to 83.65mmt, down 10.2mmt from last month’s forecast, the USDA remained optimistic at 94mmt.

  • Malaysian palm oil was up 6 ringgit in overnight trade.

  • Export sales estimate: 500tmt to 1.0mmt.

  • Spread trade is quiet this morning: X/F 13 ½ cent carry, X/H 26 and X/K 38 ¼ cent carry. Cash remains weak with poor export demand. 

  • Deliveries of 340 contracts of beans, 225 soyoil and 23 contracts of soymeal. 

Outlook: Trading weaker as US supplies get larger. 

Wheat

  • The wheat market continues to be choppy with not much fresh news to trade.

  • As expected, the USDA made minor revisions to the US S&D yesterday ahead of the Sep 28 small grains summary report.

  • The World supply and demand situation garners the attention as the world’s major suppliers battle tighter exportable supplies. Possibly the biggest surprise from the USDA yesterday was their increase to Russia’s production, increasing from 68mmt last month to 71mmt.

  • Weekly export sales estimate: 300 to 500 tmt.

  • Deliveries: 53 contracts Chicago SRW, no Chicago HRW or MGEx.

  • Spreads are lightly mixed: MWZ/H is trading at a 15 ¾ carry, KWZ/H is 21 ¾ carry and the WZ/H is trading at a 20 ½ cent carry.   

Outlook: Choppy/weaker trade as support from the world scenario wanes.