CBOT Values Slide on Charts and Gulf Export Uncertainty; US Corn/Soybean Yield Data Important late Week; India Cuts Vegoil Import Taxes
6:30 CT CBT Prices: Nov soybeans are down 4.50 cents at $12.82, Dec corn is down 5.50 cents at $5.12 with December Chi wheat down 3.25 cents at $6.8525.
AgResource Morning Grain/Soy Comment & Analysis: Good Morning! It has been a mixed overnight trade as CBT futures opened firmer and then retreated on chart based selling. Non-US traders reacted to the USDA September crop report, but the unknowns on US corn/soybean yield and the slowly returning US Gulf export capacity produced two-sided trade. The US dollar was slightly higher.
CBT preliminary open interest for Friday showed Chicago wheat off 2,355 contracts, corn down 6,562 contacts, and soybeans up 1,243 contracts.
US and European stock markets rallied to start the new week with critical inflation data due later this week. The US CPI should help in determining when the US Central Bank may start to taper its bond purchase program. Industrial metal prices surged with aluminum reaching its best levels since in 13 years at $3,000/MT. Funds appear willing to chase a commodity market when there is a fundamental story of tightening supplies amid strong world demand.
India has cut its base import taxes on vegoils including palm, soy, and sunflower oil to quell rising domestic prices. The base import tax on palmoil was cut to just 2.5% from 10%, while the tax on soyoil/sunoil was cut from 7.5% to 2.5%. India is the world’s largest vegoil importer.
India saw no need to cut the rape/canola oil import tax with prices doubling over the past year. The Indian vegoil tax cut is expected to raise consumption and imports ahead of key coming festivals.
Saudi Arabia secured 382,000 MTs of world wheat for November at a landed price of $355.68/MT. The price was above trade expectations.
Russian fob export values continue to rise with the price set at $305-307/MT amid the increase in the export tax to $52.50/MT. ARC maintains that the Russian export tax will rise to $70/MT plus in October as world wheat prices continue to rise and score higher highs. The US wheat price slump is temporary
Tropical storm Nicholas is taking aim on the Texas Coastline today with heavy rain and gusty winds to 60 MPH. Nicholas’s rainfall across the Louisiana Coastline of 2-4.00” could cause delays in electrical service restoration.
Malaysian November palmoil futures rallied 42 ringgits at 4,320 RM/MT. Paris December wheat is up €.25 at €238.00/MT. Dalian January corn rose $.05 $9.76/Bu while December soymeal rallied by $5.60/MT to $566.70. Chinese crush margins are in the green which should produce ongoing US soybean purchases.
There is no indication that the rainy season is prepared to start across N and C Brazil over the next 2 weeks. The hot/dry weather will prevent early soybean seeding which will become a market worry in October.
US combined US corn/soybean seeding rose just 200,000 acres on Friday which places real emphasis on harvested yield data. Early harvest results are not encouraging, but its far too early to delineate a trend. This is no place to be selling breaks. Cash market strength for spot corn/soy argues for a bullish September stocks report at the end of the month. ARC doubts that the overnight weakness can be sustained.
North American Weather Pattern Discussion: The primary US weather models agree and our confidence in the forecast is high. Tropical Storm Nicholas is strengthening in the Gulf of Mexico and could reach a weak hurricane status before making landfall across SE Texas late today. Wind gusts could reach 60 MPH with heavy rains of 4-8.00” forecast for the Texas Coastline and 2-4.00” for Louisiana. The remains of Nicholas will pass NE into Mississippi, Alabama and Georgia through Wednesday with rains of 1-3.50”.
The remainder of the Central US will hold in a warm/dry trend with summerlike high temperatures in the upper 70’s to the mid-90’s. The heat/dryness will push crop maturity. The attached 10-day rain graphic is from the GFS model. A Ridge of high pressure elongates and progresses east across the Central US producing much above normal temperatures with highs in the 80’s to the mid 90’s. A few lite showers of .1-.6” will fall across the Lake States late Tuesday with generally dry/hot weather holding across the Plains and the W Midwest. The heat/dryness is accelerating crop dry down with the Midwest harvest to start in earnest later this week. ARC looks for US GD/EX corn/soy ratings to fall 1% this afternoon.