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Daily Market Report: 10.4.19

Macroeconomic News & Weather

  • Dry conditions are forecast into mid-month. That will be very helpful for harvest progress. Forecast models also introduced frost / freeze threats for the northwest Corn Belt (ND, SD, MN, north NE, north IA, and WI) late next week / weekend. The impact on yields may be minimal but could affect quality on late maturing crops (soft corn that doesn’t dry down / won’t store very well).
  • The Trump administration is expected to announce sometime today details of a U.S. biofuels policy deal to help farmers angry over waivers granted to refiners exempting them from using corn-based ethanol and other biofuels.

Vegetable Oil: Soybean oil futures are up 15 cents / cwt.

  • The U.S. Department of Agriculture (USDA) reported more U.S. soybean purchases by China on Thursday, the second consecutive daily confirmation of sales to the world’s top soy importer. For additional details, click HERE.
  • Brazil officially began the soybean planting season in mid-September, but it has been slower than normal this year due to the dry conditions, and the forecasts are still not certain when farmers will be out of the woods. For additional details, click HERE.
  • The biofuels solution is rumored from “sources familiar with the situation” would allow hardship waivers to continue but maintain a rolling 3-year average of the amounts waived and add them back to the mandates the following year. If the reports are true, it is a creative compromise, but enforcement, allocation, and timely issuance of waivers would be difficult.

Price Outlook: The anticipation of the biofuels deal is supportive to the market.

Wheat: Soft and hard wheat futures are both unchanged this morning.

  • U.S. export sales for the week thru Sep 26 were 329 tmt, up from 283 week-ago but vs the 5-wk average at 364 tmt and 400-425 tmt/week needed to reach annual projections.
  • Saskatchewan reported 47% of their crops were harvested as of Sep 30th vs 39% week-ago and 75% average for this date. Spring wheat was 44% harvested with 10% swathed, 25% ready and the last 21% still maturing.

Price Outlook: Consolidating trade in wheat likely continues until the USDA’s corn and soybean crop estimates next Thursday.

Cocoa: Futures were down $20 this morning.

  • Showers and thunderstorms occurred in key growing areas of the Ivory Coast and Ghana during the past couple of weeks. This will favor development of the main crop areas at this time but may cause some fieldwork delays.
  • Technical traders note that cocoa is approaching the summer high. That should provide strong resistance to further price increases.

Price Outlook: The market is not expected to make new highs.

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