Blogging by the Bushel
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Market Report

Tuesday October 2nd, 2018

December closed up 1 ¾ at $3.67 ½ and March 19 closed up 1 ¾ at $3.79 ½. November beans closed up 8 ¼ at $8.66 and January 19 closed up 8 ¼ at $8.80. December wheat closed up 9 ¾ at $5.19 ¼ and July 19 closed up 10 at $5.54 ½. Crude oil closed down $.10 at $75.04.

The corn market nursed small gains for most of the day but began to run into some turbulence close to the noon hour. Cue the wheat market, which rode to the rescue, rallying double-digits on another round of Russian export limit rumors. Managed Money traders were viewed net buyers of just over 5,000 corn today, which would leave them net short an estimated 140,000 combined futures and options.

As discussed yesterday, we feel money flows at the start of a new quarter have unduly influenced price action early this week.  Some progress should have been made early this week, but mid-week, a wetter pattern is expected for the Center and Eastern Midwest, in particular. Up to 3+ inch totals are expected for a band that stretches from Eastern Kansas up to Southern Wisconsin. Flooding could be a concern, particularly with the 6-10 & 8-14 day maps suggesting no change in the existing wet pattern for most of the country. Note, next week, the USDA will update their thoughts on the crop with more “real” harvest data. A big brokerage house last night ‘genuflected at the altar of the USDA’, raising their estimates from the mid 170′s in Sept to 182.7 bpa for Oct, resulting in a 14.94 billion bushel crop.

The soybean market sustained its rally into a new recovery high on a day with very limited fresh news around. What was behind today’s strength?  A combination of soybean oil breaking out into three-month highs, a touch of weather, and strong technical action (daily and weekly) that is encouraging short covering.  Money flows are also present and supportive at the start of the month with traders talking about bullish commodity recommendations coming out of the banking sector which has funds stepping in and buying grains and other commodities from meats to energies to metals to softs in a combination of short covering and bargain hunting.

Weather has been a growing a topic of conversations to start the week as our early maturing crops and a generally early start to harvest is about to give way to delays as rains move in later this week. Soybean harvest overall stands at 23% complete, up from 14% a week ago and compares to 20% this time last year. A key area to pay attention to is Iowa where harvest is also ahead of the normal schedule as crops have matured early with 11% of its corn and 15% of its beans harvested in yesterday’s progress report but the weather pattern change suggests once the rains get started with IA somewhat in the epicenter, it could be awhile before we get back into the field and turn a wheel.

For much of the day, wheat trade battled both sides of unchanged. That all changed around noon when a Reuters headline came out and said several Russian export loading points were faced with a potential suspension. All and all, there were 30 facilities involved in which they could be closed for 90 days if they were shown to have shipped wheat with phytosanitary issues. The news sparked a rally that took trade from lower to more than $.14 higher before the move stalled. Usually when we see sharp moves such as the one we saw today, Chicago usually leads. Initially, that was again the case today, but both KC and Mpls quickly caught up to the strength in Chicago.

The question going forward is can the rally carry through. Looking at Chicago, trade over the past month has had problems on moves above $5.30. This one headline is probably not enough to get trade over that hump. But today’s headline could be just the beginning of things to come for the Russian export trade. There are a lot of uncertainties with the quality of the Russian crop, the size of the crop and what quantity they will have to export.

Anna Kaverman

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