Markets React to Unprecedented USDA Report

Morning Grains Outlook

New month. New grain markets? Grains are mixe after yesterday’s unprecedented USDA report. SX is up 7 cents and near 10.31. SMZ is near 344.8. BOZ is near 33.22. CZ is up 3 cents and near 3.82. WZ is unchanged and near 5.77. KWZ is down 2 cents and near 5.07. US stocks are higher. Possible US stimulus package. US Dollar is lower. Crude is lower. Gold is higher. China Holiday starts today.

For the month, SRW Wheat prices were up roughly 26 cents; HRW up 34; HRS up 1; Corn was up 22 cents; Soybeans up 70; Soymeal up $30.00, and; Soyoil up 30 points. Crushing margins were unchanged at $0.95; Oil share down 2% at 32%.

Chinese Ag futures are closed for a week long holiday (Oct 1st thru 8th). Malaysian palm oil prices were up 76 ringgit at 2,790 (basis December) supported by bargain buying and stronger soyoil prices.

The US Midwest 6 to 10 day forecast has dry weather building into all of the region by Monday and persist through the rest of next week. Temps will continue to be running below average across the region over the next 5 days turning average as we go through next week in the west and slightly below in the east.

The Southern Plains over the 6 to 10 day period sees little to no rainfall for most of the region. Temps will be running below average through the weekend turning to average to above for most of next week.

The Brazilian growing regions still has moderate rainfall for mostly Rio Grande do Sul in both the 5 and 6 to 10 day outlook with little in the way of rains for the rest of the growing areas. The Argentine growing regions will see light to moderate rainfall with 70% coverage over the next 5 days. The 6 to 10 day outlook has light rainfall in most areas with a better pick-up of precip for the southern growing areas.

The bottom line does not offer any hope of drought relief in Russia’s Southern Region. And any further relief in Ukraine is confined to the next three days favoring western portions of the nation.

There is increase talk of a post US harvest rally linked to big US export program and some South Americas weather premium. Tightening US corn and soybean supplies adds importance to 2021 South America weather.

Range of guesses for US 2020/21 corn carryout is now near 1,800 to 2,280. US soybean 2020/21 carryout range is 325 to 445. US wheat 2020/21 carryout is estimated near 875. Key in corn and soybean is final yield.

First guess for US 2021/22 wheat carryout is near 765. Attention now turns to US south plains, Russia and South America weather. Need lower US 2020 corn and soybean crop and continued dry weather in US, Russia and Brazil/Argentina to push futures higher.

Range of guesses for today’s US export sales report is 200-500 mt wheat versus 351 last week, 800-1,400 mt corn versus 2,139 last week and 1.500-2,500 mt soybeans versus 3,195 last week,

On USDA Thursday, Managed funds net buyers of 25,000 contracts of SRW Wheat; net bought 55,000 Corn; bought 30,000 Soybeans; bought 11,000 Soymeal, and; net bought 4,000 Soyoil. We estimate Managed Money net long 30,000 contracts of SRW Wheat; long 145,000 Corn; net long 217,000 Soybeans; net long 68,000 lots of Soymeal, and; long 99,000 Soyoil.

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