We kicked off the day with Fed Logan Speech at 7:55 A.M., CB Leading Index at MoM at 9:00 A.M., Export Inspections at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 A.M., Fed Kashkari Speech at 12:00 P.M., Milk Production at 2:00 P.M., Crop Progress at 3:00 P.M., and Fed Shmid Speech at 4:05 P.M.

Funds turned bullish ag markets in early October establishing the first next long position in over a year. This weeks Commitment of Traders report showed that funds were not long across the major CBOT/CME markets, but the position was pared back by 64,100 contracts to just 16,200 vs. Last week. On the week, funds sold 63,300 corn, 40,900 soybean meal, 18,500 soybean, and 5,600 soybean oil futures contracts. Across all 3 wheat exchanges, funds bought 5,400 contracts. Funds also bought 8,700 contracts in cattle, 4,400 contracts in hogs, and 1,100 contracts in feeder cattle. The net long grain position argues that managed money has room for sizable sales in the weeks leading into 2025.

Image Source: Unsplash

South American Weather Pattern Discussion

South American Forecast Outright Wet Next 10 Days:

The South American forecast is broadly consistent with prior runs, though projected rainfall totals in key areas of central and northern Argentina continued to be increased. Assuming the EU and GFS 5-day forecasts are correct, accumulation of 1.25-4.00’ will blanket Cordoba, Santa Fe, and far N Buenos Aires in Argentina. Otherwise, welcome dryness is forecast in Oct 23 across RGDS/Parana and far S Brazil. Near daily rain chances persist in Mato Grosso & Goias, where 10-day accumulations are pegged in a range of 2-5.00”. Moisture deficits in N Brazil, which were widespread as of early Oct, are in rapid retreat. NOAA’s bias – corrected 7-day precipitation anomaly forecast shows South American rainfall will be abundant in the key crop areas. Improving soil moisture drops temperatures, with highs in the 80’s to be more common in S America moving forward. The monsoon flow is well underway across Brazil into year end.

Central US Weather Pattern Discussion

US Forecast Pushes Plains Rainfall West; Less Projected Rain Across KS; Drought/Abnormal Dryness Covers 89% of Central US:

The Central US forecast has moved rainfall Sun-Tuesday farther west, with the heaviest totals (1-4”) favor NM, and SE CO. Welcomed rain will impact TX/OK Panhandles & Western KS, but rainfall totals are centered at just .25-1.25. Arid weather trends hold elsewhere into Oct 20^th, with hints of better rain chances thereafter in the last week of October. Confidence in 11-15 day guidance is low amid model disagreement, but Ag Resources (ARC) maintains an outlook for improved Central US moisture during November. The Drought Monitor showed one-class degradation occurred in most areas of the US Ag Belt, with severe drought present in Central Plains and Upper Midwest. Some measure of dryness covers 89% of the US Corn Belt. It’s of course not an issue except for winter wheat, but moisture is needed to end drought prior to April 1^st exceeds what is normally recorded in the C Plains and W Midwest.

Argentine Corn Production Discussion

Argentine corn producers have responded to better-than-expected October rainfall with accelerated pace of seeded. Total corn planted area in Argentina is forecast to be down 1.5-2.0 Mil acres after recent year’s crop woes (corn stunt disease) but the 1^st crop planting is off to a solid start. The Argentine corn crop this week is 24% planted, vs. 19% a year ago and 27% on average. Early crop ratings will be above normal and the second crop planting, which begins in December will likely enjoy adequate to surplus soil moisture across Cordoba, Santa Fe, Entre Rios, and far norther Buenos Aires – which combine for 55-60% of total Argentine corn production. The Buenos Aires Exchange is expected to begin reporting early planted crop conditions in November. Argentine farmers will likely seed 1^st crop corn production as La Nina forms and could cause dryness in early 2025. This is a year for Argentine farmers to seed corn early and not wait for December/January. Safrinha production in Brazil is always a coin-flip but amid recent/upcoming rain in Argentina and record yields in the US, any new supply threats awaits Brazilian weather between February-April. Better than expected Argentine rainfall in October keeps in place ARC’s strategy of selling CBOT recoveries. Argentine supply concerns will be further eased if regular rain continues into November. The impact of La Nina on South American climate is months away. Until then, both Argentine and Brazilian weather leans favorable. The next chance for concern is the late seeded Argentine soybean and Brazilian winter corn crops.

CBOT Corn Follows Wheat Lower; Relative Support Found on Nearby Export Demand:

World corn markets ended slightly lower amid plunging wheat/soybean markets and as South America weather forecast lack any threat into November. Ag Resources (ARC) detailed in Friday’s report that Argentina’s climate has outperformed expectations, and barring dryness in Dec-January, Argentine export competitions returns in bulk during April. Additionally, China’s absence from the global feed grain market is tied to Chinese farmgate corn prices being at a 5-year low and below the cost of production for farmers. The government does not want additional world corn imports. However, US corn exports are competitive. Reduced 2024 production in Brazil and Ukraine – and elevated fob premiums – is clearly funneling importer demand to the Gulf. US export sales in the week ending Oct 10^th totaled 88 Mil Bu. Based on announced sales this week ARC is pegging Thursday’s number at 85-95 Mil Bu. Sales of just 31/Mil/week needed to meet the USDA’s annual export forecast. December corn futures has support at contract lows at $3.85-$3.90. However, US corn yields remain impressive and further hike in the US corn crop is forecast during November. Corn looks rangebound amid strong demand and record large US corn yields.

Fridays open interest showed corn was up 1,277 contracts and wheat gained 10,511 contracts, while soybeans were down 4,930 contracts.

More By This Author: