Target Futures
Potent Bullish Combination May Trump Overnight Trading for Grains Opening
A steady/mixed start is indicated by overnight trading but the outside markets all point higher and that is the way I think we will start. Malaysian palm oil gained 125 ringgit today while Dalian, China grain futures were higher. Crude oil and the equity markets are higher while the $ is lower, a potent bullish combination for the grains no matter how they traded overnight.
Weekly export sales were slow for wheat at 460,000 tonnes, and corn at 413,000 tonnes. Oil was in line at 5200 tonnes while meal was toward the low end of trade ideas at 130,000 tonnes. Bean sales were great at 1.457 million tones.
Tomorrow is first notice day for Nov beans and ideas on the size of the deliveries are all over the place, anywhere from 0-1000 lots. September oil stocks were reported at 2.471 billion lbs this am by the Census Bureau vs the preliminary estimate last week of 2.528 billion, which is friendly for oil. However, only 247 million lbs of bean oil were used during the month to make biodiesel fuel (methyl ester) vs 301 million lbs in August.
Beneficial rain is forecast in northern Brazil today and tomorrow, up to 1" each day. More welcome rain is forecast Sun-Mon. Southern Brazil remains too wet with up to 1.5" the last 24 hours. More rain is predicted the rest of the week in Parana, the 2nd largest Brazilian bean producing state, continuing into Monday. Rio Grande, the 3rd largest bean state in the country, will be mostly dry the rest of the week, allowing soaked fields to dry out. Argentine grain fields will be dry the next several days with isolated rain forecast in southern growing areas around Tuesday next week. More rain would be welcome in Argentina to help developing wheat and newly-planted corn and beans. Only light, isolated rain is forecast in the dry South Australian wheat areas over coming days, keeping the crop there under stress.
The US southwest winter wheat belt will remain dry today through Tuesday, allowing late planting to finish. The midwest will see continued dry harvest weather through Monday in the west and Tuesday in the east before wet weather returns to the belt, slowing harvesting once again.
Keep watching the outside markets for direction in the grains.---Vic Lespinasse
Grains Tightly Locked to the Financials Again Today
A sharply lower to possibly limit down opening is expected, following the financial markets this am. The fate of the grains will probably be locked tightly to the financial markets all day and the financials are likely to be painfully lower all day. Traders will focus on the equity and credit markets today along with the energy and metals as well as the $, which is screaming higher - a bad sign for all commodities, including grains.
Pakistan's Agriculture Minister said Pakistan will import 750,000 tonnes of optional origin wheat within the next 2 weeks. Malaysian palm oil fell 160 ringgit today.
Over the last 24 hours, southwest Australia had up to .5" of welcome rain but dry weather is forecast in the rest of the country the next 5 days or more, which will increase stress on the wheat crop. Warm and dry weather will be featured in northern Mato Grasso, Brazil's largest bean growing state, the next 5 days or more. Favorable weather is forecast in Parana, the 2nd largest bean state. Argentina will be dry the next 3 days but up to 1.5" of rain is forecast the first half of next week, which will be welcome in wheat, corn and bean areas.
The southwest US winter wheat belt will be mostly dry the next 7 days or more. The midwest saw up to .5" of rain in the west and up to 1" in the east overnight. The west will be mostly dry tomorrow through Thursday while the east will see up to 3/4" today followed by dry weather tomorrow through Thursday. This dry period will allow for harvest progress in corn and beans once fields dry out from the latest rain event.
The grains showed some independence from the financial markets yesterday but don't expect this to happen today.---Vic Lespinasse
Mixed Open in Grains Possible as Outside Markets Send Changing Signals
A mixed start is indicated this am but even this is only tentative as traders continue watching the outside markets for direction and they are sending changing signals currently. The $ is higher but not nearly as much as it has been the last couple of days. Equities are lower but not that much and they have recovered from early lows. Crude oil was a little lower before but now it is a little higher. Grain prices were mixed but mostly better overnight and we could see a similar start this am.
Weekly export sales were a little on the light side for wheat, 384,000 tonnes. Oil was poor, only 3300 tonnes and beans were about as expected, 784,000 tonnes. Corn was toward the upper end of trade ideas at 790,000 tonnes while meal was very good, 263,000 tonnes.
The Census Bureau Sep crush was slightly below trade ideas, 125.7 million bushels. Despite this lower crushing pace, oil stocks were over 100 million lbs higher than expected, 2.528 billion lbs. Meal stocks were less than indicated, 294,000 short tons according to one wire service, 289,000 according to another wire service. This crush report will be negative for beans and oil this am.
Chinese bean imports the first half of Oct were only half the level of the last half of Sep, 723,000 tonnes vs 1.35 million tonnes. Traders had expected total Oct imports of 2-3 million tonnes, a figure that is now unlikely to be achieved.
A high pressure ridge has moved into northern Brazil and it could cause hot and dry weather the next week or more in Mato Grasso, Brazil's largest bean producing state, stressing newly planted beans there. Argentine wheat areas were dry the last 24 hours with more of the same forecast today through Monday, followed by scattered, welcome rain Tue-Wed.
The southwest US had rain or snow the last 24 hours with light precipitation expected today and mostly dry weather Fri-Tue. The western corn belt had up to 3-4" heavy rain in some areas the last 24 hours, while the eastern half of the belt was dry. Light rain is forecast in the west today and tomorrow, followed by welcome dry weather. All this moisture will further slow harvesting of corn and beans. The east will see up to 1" of rain today-tomorrow with lighter amounts Saturday. The 6-10 day calls for below normal rain, which will be welcome as farmers try to continue harvesting. ---Vic Lespinasse
Bearish Signals from Outside Markets Indicate Lower Grains Open
A lower start is indicated this am, 3-5 wheat, 5-10 corn and 15 beans, in line with overnight losses. The $ is higher, crude oil and the equity markets lower this am, all bearish signals that the grain market will not ignore. As has been the case so often lately, traders will keep watching these outside markets, especially the financial ones, for direction in the grains throughout the day.
Corn harvesting was reported just 29% done last night in the weekly crop progress report vs 53% average. Beans were 67% done vs 74% average. These numbers were in line with trade ideas. Winter wheat planting is 79% done against 81% average.
Three analytical firms have cut their estimate of the Australian wheat crop since late last week, the latest being Australian Crop Forecasters, which is now predicting a 20 million tonne crop vs 21 million previously. All these firms have reduced their guess due to ongoing dry weather problems in parts of the wheat belt, especially the southeast. The current USDA guess is 22 million tonnes while ABARE, the Australian equivalent of the USDA, is 22.5 million tonnes, a figure that is likely to be reduced in their next report.
Starting Friday, Jan beans will replace Nov as the top month in the bean pit.
Argentine wheat areas enjoyed up to 1.25" of scattered rain the last 24 hours. Up to 1 1/2" is expected to be scattered over the belt today with dry weather Wed-Thur. Rain is likely again Fri-Sat in the northern part of the belt. All this rain will be welcome. Australia will see welcome rain in the west the next few days but South Australia will remain dry with very hot temps later in the week, further stressing the crop before cooler weather returns early next week. Mato Grasso, Brazil's largest bean state,will see scattered rain the next few days but hot and dry weather is forecast over the weekend. Bean planting is going at a slow pace so far this season in Mato Grasso. Oil World magazine is warning that the high price of fertilizer coupled with tight credit conditions for farmers will trim Brazilian bean production this season by 1-3 million tonnes.
The US southwest benefited from scattered rain overnight and up to 2.5" more is forecast the next 3 days, favoring central and eastern areas, before dry weather returns for the weekend. The western corn belt was dry the last 24 hours but scattered rain fell in northern parts of the eastern belt. Up to 2.5" of rain is forecast in the west today-Thursday, with dry weather over the weekend. The east will see up to 1" of rain Thur-Sun. All this rain, especially in the west, will further delay harvesting, keeping corn seriously behind normal. ---Vic Lespinasse
Higher Grains Start Expected As Confidence Grows
A higher to sharply higher start is expected this am, roughly 7-10 wheat, 10 corn and 35 beans following similarly large overnight gains. Dalian, China grain futures were much higher again today with beans limit up again as China moves to build a 1.5 million tonne state reserve of this crop.
Strength in the equity markets was behind the big overnight gains in the grains while other commodity markets were also mostly higher. All this reflects growing confidence in the world financial system and if this attitude continues during the day, commodity prices, including grains, should continue well supported also.
Another private forecaster cut his Australian wheat production guess due to ongoing dry conditions in parts of the Australian wheat belt. Western Australia will benefit from rain and cooler temps this week but South Australian wheat prospects will continue declining from dry weather with little relief in sight. Temps are forecast to be very hot in South Australia late this week, further stressing the wheat crop there. Scattered weekend rains fell in Mato Grasso, Brazil's largest bean producing state, and more beneficial, welcome rain is forecast there early this week, along with cooler temps. Argentine wheat areas had a mostly dry weekend but welcome rain is expected tonight into tomorrow, up to 1.5" before dry weather returns the second half of the week.
The US southwest winter wheat belt was generally dry over the weekend but up to 1.5" rain is forecast tomorrow to Thursday. The midwest was mostly dry over the weekend with up to 2" rain forecast for the west Tue-Wed and scattered rain forecast Thursday while the east will see up to 1" light rain in the north today and Thur-Fri. The 6-10 day predicts cooler and drier weather, which should aid harvest efforts in corn and beans.
Nov bean options expire Friday. The latest committment of traders report Friday afternoon showed index funds liquidated more positions as of last Tuesday: 14,000 corn, about 5000 each in wheat and beans and 3000 oil.
Traders will keep watching the financial markets today for guidance in the grains. ---Vic Lespinasse
Grains May Be Oversold; Persist in Following the Financial Markets
A higher start is expected in all pits this am, 5-10 wheat, 5-7 corn and 10-15 beans. These calls are highly tentative, of course, as the grains remain dependent on the direction of the financial markets as much, if not more, than the fundamentals in the grain market. Currently, the $ is higher, crude oil is lower and the equity markets are down, although not as much as earlier this am. All these outside markets are bearish for the grains and could cause them to open lower despite overnight gains in the grains.
Weekly export sales were toward the low end of trade ideas in wheat, 436,000 tonnes. The rest were very good, 975,000 tonnes of corn, 1.028 million tonnes of beans, 242,000 tonnes of meal and 16,000 tonnes of oil, which could lend support to the opening in these pits. Many traders think the grains are oversold and overdue for a technical correction, which was one of the reasons for yesterday's late rally. Any recovery in the outside markets would likely trigger a strong upward response in the grains today, which will keep the bears on guard and all eyes once again on the financial markets.
Australia will see mostly dry weather the next week or so, further stressing the already dry wheat crop in South Australia and elsewhere. In Mato Grasso, Brazil's largest bean producing state, very hot and dry weather will persist the next couple of days before cooler weather moves into the region with some rain early next week. Argentina will be mostly dry today-Sunday with welcome scattered rain of .3-1.5" Mon-Wed.
The US southwest winter wheat belt will be dry the next few days but .3-1.5" of welcome rain is forecast Mon-Wed in northern, eastern and some central areas. The midwest was mostly dry yesterday. Scattered rain of .5-1.5" will fall in the west Tue-Wed with .25-1" of scattered rain in the east the second half of next week. The 6-10 day predicts above normal rain for the belt. All this moisture will slow already delayed harvesting of corn and beans. ---Vic Lespinasse
Outside Markets and Harvest Pressure Weighing on Grains Today
A lower start is likely this am, 5 in wheat, 1-2 in corn and 7-10 in beans. Crude oil, the $ and Dalian, China grain futures are all lower today a reflection of the overall bearish economic situation. Traders will keep watching the credit and equity markets for direction as these financial markets remain a major influence on the grains.
In the background, harvest pressure continues to weigh on the grains while worldwide recession worries continue to weigh on all commodity markets, including grains. Weekly export sales will be out tomorrow am, delayed by Monday's holiday.
Argentina's agriculture secretary said bean planting this year will be up 7-10% vs last year, reaching 17.8-18.2 million hectares. Land originally intended for wheat but either not planted or plowed up due to severe drought this season may be planted with beans. Wheat production this year is now estimated at only 9.5-11 million tonnes vs the upwardly revised 16.3 million tonnes produced last year. The current USDA estimate for Argentine wheat production is 12 million tonnes. Finally, the corn hectare estimate was cut to 3.4 million hectares vs the previous estimate of 3.5 million. The next chance for rain in Argentina is early next week with showers expected to favor northern rather than southern growing areas.
Only light, isolated rain is forecast for Australian wheat areas the next several days, increasing the need for more moisture there soon.
The US southwest winter wheat belt had up to 1.5" of rain the last 24 hours in the east but the west was mostly dry. Dry weather is forecast today through Monday with rain Tue-Wed in central and eastern areas. The 6-10 day calls for wet weather in the east and below normal rain in the west. The midwest saw scattered rain yesterday, especially in the east with up to .75". The west will be dry today through Saturday with scattered rain Sunday and again Tue-Wed. The east will be dry today-Sunday with rain Monday and again Wed-Thur. The 6-10 calls for above normal rain, which could slow corn and bean harvest progress.
Watch the financial markets again today for direction in the grains. ---Vic Lespinasse
Grains Likely to Continue Following Financial Markets
A lower start is expected this am, how much will be determined by the financial markets condition as we get closer to the grains opening. The very tentative early call is down 2-3 in wheat, 1-2 in corn and beans. Crude oil, equities and Dalian, China grain prices are all lower this am but all eyes are on the equity and credit markets for direction in the grains again today.
Corn harvesting was slower than expected at just 21% vs 41% average. Beans were only 51% done vs 61% average. Maturity lags normal also with corn 86% vs 95% average and beans 91% vs 96% average. Winter wheat planting is 73% done, the same as the average.
The USDA announced the sale of 120,000 tonnes of US beans to an unknown destination this am. The Baltic Exchange dry sea freight rate fell almost 11% today to 1615, hitting a 5 1/2 year low. It is now down 86% from its May high. Cheaper freight rates makes it less expensive to ship grain overseas. The US gulf to Japan rate has fallen from about $120 a tonne to just $40 a tonne, the equivalent of around $2 a bushel for corn.
There is more talk about the possibility of less expansion or even a cut back in South American bean planting due to credit problems in Brazil and government policies in Argentina, which would be bullish for US bean prices over coming months.
No rain is forecast in Argentina's wheat belt until early next week. Mostly dry weather is forecast in Australia's wheat belt for at least the next several days.
The US southwest winter wheat belt had up to 1 3/4" of scattered rain the last 24 hours with more forecast today. Dry weather is forecast Thur-Mon but the 6-10 day outlook calls for above normal rain, which will be welcome. The western corn belt saw up to 1" of rain yesterday but the east was dry. It is raining in parts of the east today, however. The west and east will see scattered rain today but dry weather Thur-Mon. The 6-10 calls for wet weather in the west but below normal rain in the east.
Watch the financial markets again today for direction in the grains. ---Vic Lespinasse
Strong Start Expected as Grains Continue to Follow Outside Markets
A strong start is indicated this am, up roughly 15 in wheat, 10-15 in corn and about 20-23 in beans. Traders will keep watching the equity and credit markets for direction in the grains, as was the case yesterday, and right now these markets point higher. The $ is lower while crude oil and the Dalian, China grain markets are higher, all supportive for our grain market.
The September NOPA (National Oilseed Processors Association) crush was a bit less than expected at 120.4 million bushels with oil stocks a bit higher than expected, 1.988 billion lbs, a little negative for beans and oil.
Weekly harvest progress will be out this afternoon with traders looking for around 50-55% of the bean crop to be harvested with 30-33% of the corn crop done. Average progress for this time of year is around 96% for beans and 41% for corn so we remain well behind normal.
Down in Brazil's Mato Grasso state, their largest bean producer, 5% of the beans have been planted vs about 2% average. There is a report Brazilian farmers have only bought 24% of their fertilizer needs as of last month vs about 70% usually for that time. This is probably due to farmers cutting back due to the very high cost of fertilizer and it could result in lower bean yields in Brazil this year. Sep Chinese bean imports were a record 4.13 million tonnes. China exported no corn during the month. Chinese corn exports the first 9 months of the year are down 96% vs last year while their bean imports are up 32% during this time over last year's pace.
Traders expect a higher corn and lower bean yield estimate in the next USDA crop production report on Nov 10. Every year since 1995 the corn yield guess in Nov has gone the same direction as the Oct yield guess. The yield this month went up vs Sep so it should go up next month as well. Traders expect a lower bean yield from the USDA next month for the same reason: Every year since 1995 but one the Nov yield has gone in the same direction as the Oct yield guess and this month the yield estimate went down so it will probably go down next month.
Australian wheat areas will be mostly dry the next several days. Argentine wheat areas saw up to 1" of scattered rain yesterday and up to 1/2" is forecast today before dry weather returns Wed-Sun.
The US southwest winter wheat belt saw up to 1.5" of welcome rain yesterday with up to 1.5" forecast today, favoring the central and western areas. The 6-10 day calls for above normal rain, which will be welcome. The midwest saw scattered rain in the west yesterday with mostly dry weather in the east.The west will see more scattered rain tomorrow, up to 1", with dry weather Thur-Sun. The east will see up to .5" scattered tomorrow with dry conditions Thur-Sun.
Weekly export inspections will be out at 10am US Central time.---Vic Lespinasse
Higher Grains Open Expected as Equity Markets Continue to Provide Support
A higher start is expected in all pits this am, 10-12 in wheat and corn, 25 in beans. Crude oil and the $ are trading back and forth this am, both currently slightly lower and not a factor for the grains at this time. The equity markets are strong this am and if they remain this way, they will provide support for the grains. However, whatever happens today, unless it is spectacular, it will be forgotten at the close as traders focus on tomorrow morning's big USDA crop report.
Weekly export sales were good for corn, 958,000 tonnes, beans, 602,000 tonnes, and meal, 204,000 tonnes. Wheat was in line, 512,000 tonnes, as was oil, 8000 tonnes.
The Argentine farmers strike is over today, removing a potentially bullish influence for our grain market for now.
There is still a widespread feeling the grains are oversold and overdue for a correction which should lend support to the market today unless the financial markets nosedive again, especially equities and credit.
The cash bean market remains very strong overall due to limited tight nearby supplies from harvest delays, reports of disappointing yields and limited farmer selling.
Tunisia is in for 184,000 tonnes of optional origin wheat today but they probably will take Black Sea origin, not US.
ADM was the main stopper of oil again today, taking 341 of the 479 on delivery, which could support the nearby oil spread.
Argentine wheat will benefit from widespread rain tomorrow and Saturday, which it badly needs. Scattered, light rain is possible the next few days in parts of Australia's wheat belt but areas that don't get any moisture will continue to see declining wheat prospects.
The southwest US winter wheat crop will be dry the next couple of days with rain forecast this weekend into early next week, .5"-1.5" amounts and good coverage, which will be welcome. The delta will see dry harvest weather for beans the next sevreral days, which will be welcome, before rain returns about Tuesday. The midwest will be mostly dry until Sun-Mon in the west, when up to 1.5" is forecast. The east will see rain return Mon-Tue, up to .75". The 6-10 day calls for below normal rain, which will facilitate rapid harvest progress. ---Vic Lespinasse
Wild Overnight Trading Makes Any Opening Grains Call Tentative
Trading was wild overnight with huge ranges and volume. Nov beans traded between 911 and 989 before ending at 929, a few cents higher. Volume was over 15,000 lots. The Fed cut interest rates a half point this am, sparking a huge rally in equity markets, only to see them turn sharply lower again since then. All this volatility makes any grain call this am highly tentative. All we can do is watch the outside markets for guidance, including the DJ industrials and the S+P 500. Right now I am guessing the grains will be mixed but, again, this is highly tentative. Crude oil is lower and so is the $ but everything could change significantly over the next hour or so.
Fundamental news doesn't mean much in this market but here it is: ADM stopped 381 of the 605 oil out on delivery, which could lend a little support to the nearby oil spreads this am. Cargill and Bunge, two of the largest commercial users of the CBOT grain markets, say the proposed changes in the wheat contract to improve convergence don't do enough. To improve convergence of the cash and futures markets when a contract month expires, they want forced load out which would mean if you take delivery, you must take the wheat out of deliverable position. ADM, another huge user of the CBOT grain markets, believes the higher storage rates, lower vomitoxin standards, and more delivery points proposed by the exchange are enough to improve convergence and forced load out is not needed. It will be interesting to see how this all ends up.
The USDA crop report is out Friday am. Traders are looking for a corn crop of 12.076 billion bushels and a bean crop of 2.920 billion. Carryout stocks are forecast at 1.138 billion bushels of corn, 188 million beans and 552 million wheat.
The Argentine farmers strike is supposed to end after today but if it doesn't, this will start to become a bullish influence for our grain market.
A light freeze in parts of the Argentine wheat belt this am could have done some damage but dry weather is the main threat to the crop. Little rain is forecast until the weekend. The Australian wheat belt had rain in the west yesterday and more is expected there today. Dry weather is likely the rest of the week after today. There is a slight chance of a frost the next day or two.
The midwest US saw scattered rain the last 24 hours in the west and it is raining today in the east. More rain is likely late this week into next in the west. There is no threat of any freezing temps for the next week. ---Vic Lespinasse
Higher Start Anticipated in Grains As Outside Markets Appear Headed Higher
A higher (that's right, higher) start is expected this am, following the outside markets. The early call is around 10 higher wheat, 2 up in corn and 20 better in beans, all subject to big changes by the opening bell. The $ is lower and crude oil is higher with the equity markets also expected to bounce after their huge sell off the last couple of weeks. Fundamentals have been thrown out the window lately and they remain in the background as the grains continue following the outside markets. If the outside markets remain higher, expect the grains to do the same today. Whether these markets have finally bottomed out and will start recovering or this is just a pause in the world wide credit crunch remains to be seen. For this am, however, all the markets appear headed higher, which will greatly influence the grains.
We have expanded limits today in all the grains except wheat: $1.05 in beans, 45 cents in corn, $30 in meal and 350 points in oil.
Corn harvesting reached only 14% vs 30% average last week according to yesterday afternoon's weekly crop progress report. Mature corn is only 73% of the crop vs 89% on average for this time of year. Bean maturity reached 83% vs 91% average. Bean harvesting was further along than expected, 31%, but still behind normal, 41%. Winter wheat planting is 59% done against 60% average.
The UN's Food and Agriculture Organization reported biofuels are partly to blame for the big jump in world grain prices. They also said the benefits of using ever-increasing amounts of biofuels don't outweigh the higher food costs.
There is still a chance for a frost in parts of the wheat belt in Argentina today but warmer temps are predicted starting tomorrow. Rain is still badly needed and the next chance comes this weekend. There is a chance of frost in parts of Australia's wheat belt with only light, isolated rain in the outlook. More rain is needed soon to keep wheat prospects from declining further in both Australia and Argentina.
The US delta will see some bean harvest delays with more rain today after rain fell over the last 24 hours in parts of the region. Dry harvest weather is forecast to return starting tomorrow and continuing through the weekend. The southwest winter wheat belt saw scattered, welcome rain the last 24 hours, up to 1.25". Mostly dry weather is forecast today through Saturday with scattered rain returning Sun-Mon. The 6-10 day calls for above normal rain in the east and central parts of the belt, below normal rain in the western areas. The midwest saw scattered rain in the west but mostly dry weather in the east yesterday. The west will be mostly dry the next few days but rain is forecast over the weekend. The east will see rain today and tomorrow, up to 1" before dry weather moves in Thur-Sun. There is no freeze threat the next 7 days.
Watch the outside markets today for direction in the grains. ---Vic Lespinasse
Economic Turmoil Continues to Impact Grains; Lower Open Expected
A sharply lower start is expected in all pits this am, roughly 30 wheat, 20-25 corn and 60-70 beans. Dalian, China grain futures were sharply lower to limit down today after a one week holiday. Crude oil is sharply lower, as are the various equity markets both here and abroad, while the $ is higher. Of course, all this is a reflection of continued and spreading economic turmoil as credit contracts sharply. This weighed heavily on all commodities last week, including grains, and did so again overnight.
In other news, the Argentine farmers strike started Friday and is scheduled to last 6 days. If it extends beyond this, it could become a bullish influence for our grain market but for now it is of little consequence. Yemen is in the market tomorrow for 100,000 tonnes of optional origin wheat.
There was also a light freeze in parts of Argentina's wheat belt over the weekend with another expected in the next couple of days. Little damage is likely to result from this, according to Meteorlogix Weather. There is a threat of a freeze in parts of Australia's wheat belt this week but damage is not currently expected to be heavy, again according to Meteorlogix Weather.
There was a light freeze over the weekend in the US northeast corn belt but little damage is thought to have occurred. Widespread rain is forecast today into tomorrow in the southwest US winter wheat belt with up to 1.5" predicted. This comes on top of .3-1.5" of rain that fell over the weekend in parts of the belt. More rain is possible Friday and the 6-10 day calls for above normal rain in northern and eastern areas but below normal rain in the southwest part of the belt. All the recent rain and the forecast rain this week is welcome. Rain will slow bean harvesting in the delta tomorrow and Wednesday with up to 1.5" possible. The corn belt saw light, scattered rain over the weekend. Rain is forecast in the west today, tomorrow, and again Thur-Fri, up to 1". The east will see rain Tue-Wed, up to 1.5" with dry weather the rest of the week. The 6-10 calls for wet weather in the west and below normal rain in the east. ---Vic Lespinasse
Markets Watch the House for Possible Direction Again Today
A mixed start is expected this am, up 2-4 in wheat and corn, off 4-5 in beans. Crude oil has been trading back and forth on either side of unchanged this am while the $ is a bit higher, not sending any strong signals either way to the grain market. Chinese markets remain closed until Monday for their Autumn Festival holidays.
Informa will estimate US wheat, corn and bean production at 10:30am US Central time but little market reaction is likely.
The House is scheduled to vote on the bail out bill at 11am US Central time and results of this vote could strongly impact all markets, equities and commodities. If the House approves the bill, it would likely rally both equities and commodities markets, including grains. If the House doesn't approve the bill, which is a possibility, this would likely be bearish for all the markets.
UBS announced they are exiting the commodities business. I don't exactly know what this means as the article I read said they will keep their commodity index business.
Open interest fell in all the grains yesterday, down 10,000 in corn, 5000 each in wheat and beans, 2000 in meal and 1000 in oil but this is what would be expected on a big down day and a big down week.
More beneficial rain is forecast for the Argentine wheat belt today but a possibly damaging freeze threat remains for the weekend into early next week. More beneficial rain is forecast for parts of the Australian wheat belt over the weekend, specifically New South Wales. However, a damaging freeze is possible this weekend or early next week.
The US southwest winter wheat belt will see scattered rain today with up to 1" more early next week. Coverage is expected to be good. The corn belt will see scattered rain in the west this weekend with up to 1" more rain there Mon-Tue. Dry conditions should prevail in the east the next couple of days with rain possible Sunday and again up to .75" Tue-Wed. A frost is possible in northern areas tomorrow am but no damage is likely to result.
Expect drifting markets early and watch the House vote for direction this afternoon.---Vic Lespinasse
Export & Production Figures Plus Bearish Factors to Open Grains
A mostly lower start is expected this am, roughly 3-4 wheat, steady-1 corn and 5-7 beans. Crude oil is lower this am while the $ is higher, a bearish combination for the grains.
Weekly export sales were good for wheat at 652,000 tonnes. For meal, a total of 135,000 tonnes between the old and new crop years and for oil a total of 11,000 tonnes between the two crop years. Corn sales were in line: 568,000 tonnes. Bean sales were slow at 471,000 tonnes.
Stats Canada estimated all wheat production at 27.27 million tonnes, durum 5.07 million, oats 4.32 million, barley 11.22 million, and canola 10.87 million. The all-wheat estimate was higher than expected while the canola figure was a little lower than trade ideas. The other numbers were generally in line.
FC Stone estimated US corn production at 12.026 billion bushels vs the USDA Sep guess of 12.072 billion. FC Stone's bean guess was 2.889 billion vs the last USDA guess of 2.934 billion. FC Stone's yield estimates were 151.7 bushels per acre for corn and 39.4 for beans.
3500 oil and 119 meal were delivered this am with no large commercial stoppers. 300 million lbs of bean oil were used in August to make biodiesel fuel, up from July's 287 million but way down from Aug 2007, when 376 million lbs were used, according to this morning's monthly oil stocks report.
The USDA attache in Canberra, Australia cut his wheat production guess from 22.4 million tonnes to 21.6 million. The USDA currently is 22 million. They will put out their new estimate Oct 10.
A damaging freeze is possible in Argentine wheat areas this weekend and in parts of the Australian wheat belt Monday am. Welcome rain is forecast in parts of the Argentine wheat belt tomorrow after beneficial rain fell yesterday but amounts are expected to remain light. Rain is forecast in some of the Australian wheat belt today through Saturday.
The US southwest winter wheat belt will be dry today through Saturday with up to .75" of rain forecast Sun-Mon. The 6-10 day calls for warm and wet weather, which will be welcome. The US midwest might have had a freeze in northern areas this am as temps dipped into the low 30's. A freeze is still possible in the north the next couple of mornings. Good harvest weather is forecast in the western half of the belt the next few days but up to 1" of rain is possible there Sun-Tue. The eastern half of the belt will be dry today through Monday with rain expected Tue-Wed. The 6-10 day calls for wet weather in the west and below normal rain in the east.
The Senate passed the bail out bill last night and the House will vote on its version of the bill tomorrow. All the markets will be watching this vote. If the bill passes, it is likely to be viewed as friendly for commodities, including grains, since it will be inflationary. If the bill doesn't pass, it will probably have a bearish impact on the grains. ---Vic Lespinasse
Possible Technical Correction Due in the Grains
A higher start is expected this am, 5-7 wheat, 5-10 corn and 5-7 beans. Crude oil is lower and the $ is higher, a bearish combination for the grains. This morning's expected higher start is based on the need for a technical correction following the very steep losses so far this week in most pits, especially beans.
Many traders think the Senate will pass a bail out bill late today and the House will follow suit later in the week, perhaps Friday. This is taking a lot of pressure off all commodity markets as a bail out bill is likely to be inflationary, which is bullish for commodities, including grains.
Argentine farmers are going on strike for 6 days, starting Friday. They will not sell any grain during this time. If this strke only lasts 6 days it won't impact our markets but if it is extended, especially for a prolonged time, this would be bullish for our grain markets as it would boost US grain export demand.
Meal deliveries were 333 lots today with 3700 oil on delivery too. There were no large commercial stoppers. FC Stone puts out its October crop estimates tonight ahead of the USDA estimates a week from Friday. Also Stats Canada puts out its crop production guesses tomorrow am. South Korea bought 275,000 tonnes of US/South American corn overnight.
Argentine wheat areas will see light, scattered rain today-Friday. There is a chance of freezing temps in parts of the wheat belt over the upcoming weekend, which could do some damage to the crop. Australian wheat faces a frost threat early next week in southern parts of the belt. Welcome but light rain is forecast for parts of the belt Fri-Sat.
The US midwest will be mostly dry today through Saturday with rain likely Sunday, especially in the west. The 6-10 day calls for warmer and wetter than normal weather in the west but cooler and drier than normal weather in the east. There is the possibility of a frost in the northwest part of the belt the next two mornings.
Index funds have had a very tough time the last 3 months due to declining prices in most commodities. The 5 largest funds were down an average of 25% during this time and they are now down 2.4% for the year to date. Of the 5, only the Detutsche Bank fund is up for the year, 8.2%. It is estimated roughly $150 billion remains in index funds, down from at least $200 billion earlier this year. ---Vic Lespinasse
