Grain Markets Await Their Next Catalyst
Oct 17, 2018
Good Morning from Allendale, Inc. with the early morning commentary for October 17, 2018!
Grain Markets are waiting for the next catalyst to move prices. With US harvest advancing, no major USDA reports for the next several weeks, and no new news on trade wars, what will provide the next big move?
Weather forecasts remain mostly clear in the near term allowing for active harvest to take place throughout the Midwest. This week's crop progress report showed harvest a little behind where most analysts thought it should be, but the pace should pick up.
U.S. wheat exports look set for a strong second half of the 2018/19 season when shipments from Russia are expected to slow, the chairman of the U.S. Department of Agriculture's (USDA) World Agricultural Outlook Board said on Tuesday. The USDA is forecasting U.S. wheat exports in the 2018/19 season will rise to 27.9 million tonnes, up from 24.52 million tonnes in the previous season. (Reuters)
Corn basis bids were mostly steady around the country with a few easing as farmer sales are expected to increase with harvest soon to be back in full swing. Soybeans bid were also mostly flat.
Trading funds were estimated sellers in yesterday's trade of 12,000 corn contracts, 6,000 soybeans, 1,000 wheat, 4,000 soymeal, and 1,000 soyoil.
Nigeria, Colombia, Jordan, Japan, South Korea, and Bangladesh have all issued recent tenders to buy wheat. Traders are waiting to see who has the most competitive bids, and from where it will ship.
Egypt is considering the possibility of hedging its grain buying price risk according to the countries Supply Minister, Ali Moselhy. "Until now we are buying spot ... there is a working group formed within the finance ministry to study this (hedging) ... but to this moment no decision has been taken," Moselhy said.
Economic reports out today include Mortgage Applications at 6:00 AM CDT, Housing Starts and Building Permits at 7:30, and FOMC Minutes at 1:00 PM. Crude Inventories will also be out this morning.
Allendale released estimates for Friday's Cattle on Feed report. Placements are expected 0.2% over last year at 2.154 million head, which would be the largest September placement in seven years. We estimate Marketings in September at 0.7% under last year for a total of 1.771 million.
Total Cattle on Feed as of October 1 is estimated 5.9% over last year at 11.446 million. That would be a record October 1 total since the 1996 start of the current data-series.
The China Securities Journal reports that a large grain firm, Dabeinong Technology Group, has found African Swine Flu in its farms. Most assume this announcement means they were affiliated with Monday's announcement of the largest ASF yet, 19,938 head. At this time there have been more than 30 outbreaks among nine provinces.