Quiet news saw markets sell off once again on wheat even as row crops firmed slightly with ongoing ideas of slightly lower than expected yields.  Chicago wheat closed down 7 1/4¢ to 527 3/4¢, KC -10 1/4¢ to 446 1/4¢, Minny -9¢ to 520¢, and Matif -1.25€ to 182.5€ on the earlier close.  Corn was up 4.5¢ and beans up a penny (Winnipeg closed up $3, Matif unch).  On the macro side, crude oil has firmed to $42.6 WTI / $45.2 Brent and the DOW picked up 378 points in the US after some optimism about the trade deal talks (warranted or not, political feedback was that talks were “constructive”).  The dollar didn’t see any real solid support off such ideas though, with the DXY at 93.2 as the AUD trades at 71.7¢, the CAD $1.322, and the EUR $1.180.

The US and China continue to dominate global macro headlines, with last night’s phone call between the two reportedly highlighting purchase levels and commitments.  Both sides have been non-committal as to the actual discussion wording. One can only speculate as to how wide the difference of opinion is given poor to-date Chinese progress in reaching agreed-upon levels.  US politics is also an ongoing mess, with the election now two and a half months away and political attacks heating up.  The latest polls have closed the gap somewhat between Trump and Biden, but two and a half months can be a long time in politics.

Egyptian buying agency GASC is tendering again for wheat, mid-late October this time. Black Sea offers should continue to dominate, although some are speculating that the “GASC premium” may push up a little bit with some of the more distressed longs closed out. Higher “official” handling fees at a number of Russian deep see ports have made headlines, although individual performance will depend on existing contracts and relations.

Storms loom

Two large storm systems are moving towards the US Gulf this week, with markets watching to see their strength. This is reportedly the first occurrence in many years where two storms of this magnitude have come at nearly the same time. No export sales flashes appeared to start the week, inevitably disappointing the permabulls. US export inspections came in mostly as expected, with wheat at 570,000t, corn 890,000t, and beans 1.15 million tonnes.  We’ve got about one and a half more weeks before the roll over to new season corn and bean inspections/sales. Talk about winter wheat planting intentions is starting to pick up, with some chances of light rain across Kansas later this week/early next increasing optimism about seed bed moisture levels.  Dry soils will by no means eliminate HRW plantings, but some moisture in the coming weeks will do wonders for optimism.

US spring wheat harvest came in at 49pc by government estimates (vs estimates at 46pc average… though we’re unsure why markets were so pessimistic given the weather) and yields continue to generally outperform.  Unofficial Lachstock survey figures saw yield results generally ranging around 10-20pc above average in Montana, and +/-10pc of average in North Dakota.  Variability has been the name of the game for yields, quality remains very positive for most, with the late summer rains this year making for wide variances in realized yield based on planting dates

Local Markets & Drivers:

Rains across southern Victoria have continued to fill in the gaps, with more reports about oversaturated fields causing localized angst.

New season export ideas are being bandied around the market, with the more optimistic crop estimates driving corresponding ideas about elevation tightness in NSW.