Make Hay While The Sun Shines

Make Hay While The Sun Shines

Sep 22, 2017

 

Market Watch with Alan Brugler

September 22, 2017

Make Hay While The Sun Shines

The soybean market was up a modest 1.6% this week, but it felt like it should be doing more. There were almost daily announcements of large (>100,000 MT) bookings to either China or “unknown destinations” with a few other customers trying to get ahead of the Chinese as well. USDA announced a much larger than expected weekly export sales total of 2.338 MMT (85.9 million bushels). This was also happening with futures 20-30 cents off of their lows and a couple weeks ahead of what MRCI and others identify as a typical harvest low in early October.

So why are the futures so sluggish?  First of all, it is planting season in Brazil, and a futures rally in Chicago soybeans definitely encourages corn to soybean acreage shifts. Some interior Brazil corn prices were below $2.60 per bushel last week, which makes the shift attractive. The other item we note is that this is all catch up business. Chinese commitments were still only 84% of last year on September 14, which includes Thursday’s numbers but not the daily announcements this week. They are behind because they have more Brazilian beans to bring in for Sept-Oct than they did last year, but need to start getting things on the books for late fall.  We’re not calling a top here, but merely pointing out that there are some showers in the extended market forecast.

Corn futures fell just 0.35% this week, down for the second week in a row. Corn conditions ratings saw the Brugler500 index again UNCH for the week to 357. Harvest is off to a slow start, as the national average was at 7% complete as of last Sunday, vs. that average of 11%. Weekly export sales for the second week of the new marketing year were a disappointment to most, as 526,867 MT was reported. Friday’s Commitment of Traders report showed spec traders expanding their net short position another 15,194 contracts in corn futures and options during the week. They had a net position of -134,606 contracts as of September 19. 

Wheat futures saw a change in the inter-market spreads this week. For the past couple weeks the HRS/HRW spread was unwinding, but that was reversed this week. MPLS was 2.13% higher, with CK up just 0.95% and CBT a half cent higher. Monday’s Crop Progress report showed winter wheat planting at 13% complete, behind the average of 15%. New crop…

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