Grains ended the day higher on Thursday:
Dec Corn + 3 ¾ cents/bu (5.29 ¼ )
Nov Soybeans + 1 ½ cents/bu (12.84 ¼ )
Dec Chi Wheat + 12 cents/bu (7.17 ¾ )
Cdn $ +0.00795 (79.045 cents)
WTI Crude Oil +1.07/barrel (73.30)
Broad based commodity and equity strength helped to fuel gains in grain markets today. Grains were also helped by a weaker US dollar, which fell due to comments from the US Federal Reserve yesterday confirming no nearby interest rate increases. Equity markets were cautiously optimistic today that a workable solution can be found for troubled Chinese real estate developer Evergrande Groupe.
This morning the USDA released it’s Weekly Export Sales Report, with sales for the week ended Thursday, September 16th falling well within the range of expectations. The ongoing terminal issues caused by damage from Hurricane Ida continue to adversely impact sales. It is starting to become concerning that weekly sales levels are beginning to significantly drag behind “same week” levels from last year. Actual sales totals are listed below, in thousands of tonnes
Of the 902,900 tonnes of soybeans sold last week, 624,000 tonnes were sold to China. Year to date soybean sales are now running 12.3 million tonnes (450 million bushels) behind where they were at this time last year, with Chinese purchases 8.3 million tonnes behind where they were a year ago. USA wheat export sales are currently 2.5 million tonnes behind last year’s pace, but that is less concerning as the USDA is forecasting a 3.1 million tonne year over year decline in wheat sales. Only corn sales are ahead of last year’s pace, by some 2.5 million tonnes, although the slow pace of Chinese buying of late (presumably because of their ongoing corn harvest) is noteworthy.
Very little talk today regarding yesterday’s “leaked” EPA revised biofuel mandate numbers. The bottom line is that we will not know the true volumes that the government intends to require until the EPA issues an official statement.
Wheat again was the strongest grain, as multiple world importers are tendering for wheat. The USA was awarded a small wheat tender to Taiwan today (50,000 tonnes), but did not get any “extraordinary” business today. Strength in wheat was primarily attributed to fund buying, where funds have reversed course, and reportedly are small longs in the commodity now.
Domestically, harvest 2021 soybean basis is staying firm, as exporters are dismayed that the recent rains have halted bean harvest. Some late September/early October shipments were added to Great Lakes vessel line ups following the Gulf terminals damage due to Hurricane Ida. Exporters were obviously expecting to be flush with recently harvested soybeans, but with harvest likely at least a week away, basis for harvested soybeans should stay strong in the short term.
On the day, funds were believed to have been buyers across the board once again, picking up an estimated 5,000 corn contracts (long 206,000), 2,000 soybean contracts (long 58,000), and 10,000 Chicago wheat contracts (now LONG 2,000).