Weekly Market Recap
10/6/2017 4:42:22 PM
The river system is causing all kinds of problems for grain movement this year. It seems like every other day there is a new announcement of a river closure due to low river levels or aging infrastructure. The problems have caused barge rates to spike higher which in turn hurts basis levels for producers. Next week brings the October WASDE report. With better yield reports from early harvest, it will be closely watched what changes the USDA makes to yields in the report. This report will have a significant impact on prices.
Argentina’s full season corn planting is off to a slow start. Wet weather has planting at just over 9% complete compared to an average start of 15%. Brazil’s export pace is well above last year. They exported nearly 6 million tons of corn in September which is double last year’s total of 3 million tons. US ethanol production hopped back over 1 million bpd this week. Production has topped a million in 3 of the 4 weeks to start the new marketing year. Ethanol margins continue to weaken. They are currently at 12 cents which is half of what they were just two weeks ago. Corn exports were ok but nothing outstanding. We are starting the window when exports really need to be robust.
Egypt issued a tender for wheat again this week. There were 11 offers originating from Russia, Romania, and France. They bought 3 cargoes of Russian wheat. US wheat continues to be too expensive into Egypt. Syria signed a deal to import 3 million tons of wheat from Russia. Sanctions have made it hard for Syria to do global business, but the Russians have plenty of wheat and are willing to take on the other risks.
With bigger crops come bigger exports. Brazil shipped 4.3 million tons of soybean in September which is sharply higher than last September’s 1.4 million tons. Soybean planting in South America is picking up speed. Brazil has finally received some rains that farmers were waiting for before starting. Argentina is finally drying out and planting is just underway. China has been on holiday this week so export activity has been quiet with just a single flash sale announcement on Monday. It should pick up significantly next week upon their return from holiday. Soybean export sales are off to a good start this marketing year. Each of the 4 weeks so far has seen sales top 1 million tons. The first month of sales are running about ½ million tons ahead of last year.
Cash trade has been light at $108 which is steady money with last week. Packer margins are also holding steady around $140 consistent with last week.
OPEC’s Secretary General told reporters that compliance to the output cut-deal between OPEC and non-OPEC nations is extremely high. Front month WTI traded below $50 for the first time in two weeks on Wednesday, but rallied Thursday on ideas that Russian and Saudi Arabia will agree to extend production cuts to curb global stocks. Keep an eye on tropical storm Nate. It is currently down in the southern gulf but the path goes over Cancun and then straight at New Orleans. This could have a significant effect on oil and natural gas.