Grains were higher overnight with wheat and soybeans posting the biggest gains of 4 cents a bushel, while corn was fractionally higher. In outside markets, crude oil & S&P futures were higher while the US dollar index was weaker.
Wheat continues to climb higher, taking out the 100-day moving average overnight. Weather concerns in Ukraine, Russia, and Australia continue to be supportive of wheat. After the close yesterday, Argentina’s wheat crop was pegged at 9.5 MMT by the exchange there, putting it below USDA’s latest forecast of 10.5 MMT and last year’s production of 11.75 MMT. In Australia, the wheat crop could face quality downgrades as parts of the country's eastern grain belt are forecast to receive heavy rains in the days ahead, potentially damaging the crop which is ready for harvest. Dry weather in September and above average temperatures this month have already curbed yields of high-protein Australian prime hard wheat in the world's fourth largest exporter of the grain.
USDA’s weekly export sales report was for the first time above expectations for all three commodities. However, corn continues significantly lag behind the pace needed to reach USDA’s annual forecast by 250 MB. Export business for US corn is expected to pick up as competition from South America wains in the coming months, but given the extent of the deficit, it seems likely USDA will need to lower their forecast for corn exports.
S&P futures (ESZ5) are closing in on the 2,100 mark, which would be a full recovery from the sell-off triggered by China’s weakness in August. A report on personal spending today will help investors assess the strength of the economy, as will a continuation of company earnings reports.
Crude futures (GCLZ5 / QMZ5) held steady overnight, poised to post the first weekly gain in three weeks despite a supply glut that has tested storage capacity and hammered company results. The potential gain, driven by smaller-than-expected builds in U.S. oil stocks, was widely viewed as a temporary boost in a market that is awash with oil and staring down sluggish economic growth in key markets such as the United States and China.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)
