Grains closed mixed on Tuesday:
Dec Corn – 3 ¼ cents/bu (5.37 ½ )
Nov Soybeans + 14 ¾ cents/bu (12.50 ½ )
Dec Chi Wheat – 11 ¾ cents/bu (7.44 ¾ )
Cdn $ +0.00020 (79.50 cents)
WTI Crude Oil +1.31/barrel (78.93)
Tuesday’s trade in grain futures saw soybeans race to higher values over the course of the day trading session, while cereal futures struggled and were in negative territory for almost the whole day.
Soybeans were strong, as soyoil futures rallied significantly, closing up 2.32 cents per pound, or almost 4%. The strength in soyoil was tied to stronger crude oil values, and to speculation that biodiesel mandates will not be cut like ethanol might be as part of the EPA retooling of biofuel mandates. The strength in soyoil futures added 27.5 cents to the value of a bushel of soybeans, while the lower soymeal price subtracted 6 cents from the value of soybeans. Netting the oil and meal out, soybeans could have rallied over 20 cents/bu, but the weakness in the rest of the grain complex ate some of that value up.
Not a lot of corn news in the market today. StoneX projected average corn yield at 176.6 bu/acre yesterday, and HIS Markit published their yield at 176.8 today (USDA was 176.3 in September). Yesterday, the USDA indicated that 88% of the corn crop was mature, so now, it is just a matter of harvest weather that will determine how fast the crop comes in. Weather forecasts this afternoon show some eastern Corn Belt delays at the end of this week, but the rest of the Midwest should make good progress. Next week, the west looks to have some precipitation issues, but with the calendar only in the first week of October, no one seems concerned about Midwest weather at this point.
Wheat futures were lower today, as it is believed that Russian exporters will aggressively try to ship out wheat before new higher Russian taxes on wheat exports take effect. Corn and wheat values will move somewhat together, but weakness in wheat should be limited until after the US winter wheat planting window closes. Until then, the market needs to work to get every acre possible seeded to wheat, given that US projected wheat carryouts are the tightest since 2008. In addition, Chicago wheat futures need to maintain at least a $2.00/bu premium to their respective corn futures, so as to ensure that additional wheat does not find it’s way into feed channels – thereby lowering the wheat carryout even further.
On the day today, funds were thought to have sold 2,000 corn contracts (long 239,000) while buying an estimated 8,000 soybean contracts (long 48,000), and selling an estimated 8,000 Chicago wheat contracts (long 13,000).