TOP STORIES:
Wheat Higher as Global Weather Watch Extends
Wheat for December delivery rose 1% to $5.50 1/4 a bushel on the Chicago Board of Trade Monday, amid reports of weather conditions hurting the wheat harvest by competitors on the export market such as Russia.
Weather events in different wheat-growing areas of the world had U.S. wheat futures leading major grains higher Monday. "A weekend Australian frost has damaged the Victoria and South Australian wheat crops according to several cash sources," said AgResource, who says that the bushel losses from the frost are currently unknown. Projections for Russian wheat are falling as well. "The ongoing acute dryness has Black Sea exporters discussing the chance that a mid-October ministry meeting could lower 2021 Russian wheat export potential under quotas," said the firm.
Grains Futures Movement May Be Limited Ahead of Report -- Market Talk
10:04 ET - Grains futures on the CBOT are down to begin trading--but overall movement of these futures may be limited ahead of the USDA's quarterly stocks report set to be released Wednesday. "The stocks report is known for its surprises," says Arlan Suderman of StoneX. "The stocks report is also expected to be accompanied by a modest reduction in the size of last year's corn crop, while last year's soybean crop is pushed larger by 45 million or more bushels." The report is due out at noon ET Wednesday. (kirk.maltais@wsj.com; @kirkmaltais)
STORIES OF INTEREST:
Ethanol Inventories Expected to Grow -- Market Talk
11:17 ET - US ethanol inventories are expected to increase this week, says Terry Reilly of Futures International. The firm says that it expects ethanol inventories to rise 50,000 to 150,000 barrels this week, bringing the total back over 20M barrels for the first time in roughly a month. For traders watching for signs of economic recovery, an increase of inventory would suggest a stagnation in fuel demand--bad news for corn farmers looking for demand stemming from ethanol consumption to recover. However, daily ethanol production is also expected to grow, by 7,000 barrels from 906,000 barrels per day last week. Corn futures on the CBOT are down 0.1% Monday. (kirk.maltais@wsj.com; @kirkmaltais)
No New Flash Sales to China Reported by USDA -- Market Talk
09:33 ET - The USDA has again not reported any new flash sales of grain exports to China today, which may exert pressure on CBOT soybean futures today. The USDA did report 110,800 metric tons of corn sold to Japan, as well as 207,140 tons of corn and 218,300 tons of soybeans sold to unknown destinations, but the absence of China in these figures may cause fund traders to pull out from the large net long in soybean futures among managed money funds - 211,590 contracts as of the CFTC's latest report Friday. "In the near term, the market may need to push out more of the speculative length," says Doug Bergman of RCM Alternatives. (kirk.maltais@wsj.com; @kirkmaltais)
Brazil Soybean Planting Begins as Scant Rains Leave Dry Soil -- Market Talk
11:15 ET - Brazilian farmers have begun planting for the 2020-2021 soybean growing season amid hot and dry weather that has left soil in dryer-than-ideal conditions, according to agricultural consultancy AgRural. As of Thursday, farmers had planted 0.7% of the area that AgRural has forecast will be sown with soybeans for the season, slightly behind the 0.9% planted on the same date last year and below the 2.7% five-year average for the date. There has recently been some rains in parts of the Center-South region, which produces about 85% of Brazil's soybean crop, but the soil still hasn't reached normal moisture levels in most areas, AgRural says. With weather reports indicating dry weather for the next two weeks, many farmers prefer to wait before planting, AgRural said. Brazil recently overtook the US as the world's biggest producer of soybeans. (jeffrey.lewis@wsj.com)
THE MARKETS:
Livestock Futures Post Mixed Close -- Market Talk
15:26 ET - Livestock futures trading on the CME were a mixed bag - with live cattle futures finishing up 0.2% to $1.1165 per pound and lean hog futures finishing down 0.6% at 64.025 cents per pound. The cattle on feed report issued by the USDA after the market's close Friday showed that while there's still an onerous cattle surplus due to Covid-19, it has been eaten into as the US economy attempts to regain some normalcy. The inventory of cattle on feed for over 150 days is up 20.5% from last year as of Sept. 1, but that's an improvement from it being 42% back in July. Producers have managed to work down the front end supply but work still remains," says Steiner Consulting Group. (kirk.maltais@wsj.com; @kirkmaltais)