2:1 Corn-Soybean Ratio Approaching. The Corn & Ethanol Report

We kicked off the day with NY Empire State Manufacturing Index at 7:30 A.M., Redbook YoY at 7:55 A.M., Consumer Inflation Expectations and Export Inspections at 10:00 A.M., Fed Daly Speech, 3-Month & 6-Month Bill Auction at 10:30 A.M., NOPA Crush at 11:00 A.M., Fed Kugler Speech at 12:00 P.M., Crop Progress at 3:00 P.M., Fed Bostic and Monthly Statement at 6:00 P.M.

The September tractor sales data the Association of Equipment Manufactures reflected the overall weakness in commodity prices ad farm income. Total tractor and combine sales of 17,491 were down 20% from a year ago and the lowest for September since 2017. The largest decline was tractors under 40HP, which were down 21% from a year ago and the lowest in 7 months. These sales are largely to non-farming rural residents. However, total 2WD tractor sales were down 19% year-over-year, 4WD tractor sales fell 15%, and combined sales were down 41% from last year. At the same time 2WD dealer inventories were up 11% from last year, 4WD inventories rose by 35%, while combine inventories were down 6%.

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CBOT Corn Falls to Test Chart Support; US Supply Pressure to Persist into Late October:

World corn markets on Monday ended lower amid rapidly improved South American weather forecast as the US market must contend with a flood of newly harvested supply through the remainder of the month. Ag Resources (ARC) estimates harvest as of Oct 13th was 41-43% complete. An additional 4.1 Bil Bu will be gathered between now and Oct 27th . Not until early November will interior basis levels begin the process of recovery.

Managed funds covered the bulk of their net short in Sep/early Oct, and it’s demand that must drive rallies moving forward. US corn is competitive globally, but heavy chart resistance lies at $4.24-$4.35, basis Dec, and $4.35-$4.50 basis March. Ethanol margins have retreated amid weakness in cash ethanol prices. Catch-up sales are recommended on the upper end of these ranges. The outlook is neutral without adverse South American weather.


Rain Soaks Northern Brazil Next 7 Days;  Normal Monsoon Activity Forecast into Late Month:

South American forecast has trended wetter in Mato Grosso, Goias, and fringe soybean producing areas of far Northern Brazil. Moisture will be replenished across the driest sections of central and northern Brazil rapidly. New short-term South American weather threats are absent. The GFS model’s projected an abundant change in soil moisture over the next 8 days. Isolated 10-day accumulation of 4-6” will impact Mato Grosso & Goias. If realized, this places Oct 1-23 rainfall in Mato Grosso at 5.0-5.2”, vs. an average for the month of 4.7”. The pattern change will have been swift and dramatic. Importantly, Brazilian temps cool into the 80’s as soil moisture improves. A pattern of near normal precipitation/temps continues in Argentina over the next 10 days. The South American forecast is favorable.


Central US Weather Pattern Discussion

Rain to Outline US HRW Belt;  Tropical Storm Threat Absent Next 10 Days:

The major forecasting models are in agreement that needed & timely impacts most of the US HRW Bely next Sun-Tues. Calls for better rain chances across far western production areas have been consistent and confidence is high that a boost in S Plains soil moisture lies in the offing. NOAA’s updated 7-day forecast shows precipitation accumulation upward of 2-4” is offered to key areas of TX, OK, and W KS. This will be the first meaningful rain event in the HRW Belt since mid-Sep. Elsewhere a pattern of dryness and variable temps keep harvest progressing rather smoothly into the end of the month. Additional tropical activity stays away from US coastlines. More rain is desired across winter wheat production areas prior to winter, but more than enough falls to replenish the top layer of soils early next week.


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