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3 Big Things Today, October 14

Grains, Beans Higher Overnight on Purchases; Wheat Getting Boost From Strong Global Demand

1. Grains, Beans Higher Overnight on Signs of Continued Demand

Grains and soybeans were higher overnight on signs of continued demand for U.S. supplies from overseas buyers.

The Department of Agriculture yesterday said China bought 126,000 tons of soybeans and unknown buyers purchased 115,000 tons. On Wednesday, the USDA announced sales of 115,000 tons of soybeans to China and the prior day said unknown buyers took 161,544 tons of corn.

Egypt and Saudi Arabia are reportedly in the market for U.S. wheat.

Sales of corn since the start of the marketing year on September 1 are 87% ahead of last year’s pace, soybean sales are up 30%, and wheat sales are 27% ahead, according to the government.

Corn futures for December delivery rose 4¾ cents to $3.54¼ a bushel on the Chicago Board of Trade.

Soybeans for November delivery added 5¢ to $9.61¼ a bushel. Soy meal futures for December delivery rose 30¢ to $302.60 a short ton and soy oil gained 0.43¢ to 33.81¢ a pound.

Wheat futures for December delivery jumped 6¼ cents to $4.22¼ a bushel in Chicago, while Kansas City futures added 4¾ cents to $4.18¾ a bushel. 


2. Demand For U.S. Wheat Looking Up May Give Bulls a Boost

Wheat prices have been epically bad, falling at the end of August to the lowest in a decade.

While prices have recovered, the improvement was scant compared with the plunge that started in June and lasted until reaching that 10-year low in August. Futures plunged from about $5.50 in June to just below $3.90 a bushel, and are currently at about $4.20 a bushel, according to data from CME Group.

Keeping prices low were a number of factors. Production, particularly in the U.S. but also in other major growing countries, went pretty well. In the southern Plains, for example, ample rainfall in the spring helped emerging plants. Nobody was buying as prices went down, only making purchases that were absolutely necessary.

But lately, demand has been picking up, and that could be the saving grace for traders who are bullish on wheat futures.

Egypt, the world’s biggest buyer of the grain, said in a tender issued by its state grain buyer on Thursday that it wants to purchase 55,000 to 60,000 tons of soft or milling wheat for shipment next month. While that’s not unusual, the General Authority or Supply Commodities (GASC) specifically mentioned that it wanted U.S. Pacific soft-white wheat, U.S. soft-red winter wheat, or Canadian soft wheat.

It’s not just Egypt in the market for U.S. supplies. Saudi Arabia’s main state buyer said it wants to buy 595,000 tons of wheat from global supplies. The wheat would be delivered in December or January.

While the U.S. probably won’t get all of that (though it’s possible) it would be nice to get a large chunk of it. With the cost of U.S. wheat so low right now, it would be hard to see, unless they decided not to participate in the tender for some reason, why American exporters wouldn’t have a good shot at securing some of that business.

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3. Frost Advisories in Several Midwest States Unlikely to Threaten Plants  

The weather maps are mostly quiet for the Midwest today as favorable harvest weather moves in the central Midwest.

A red flag warning, which denotes a high risk of extremely dry weather and a fire hazard, has been issued for much of western Nebraska due to low humidity and high temperatures, according to the National Weather Service.

Frost advisories have been issued this morning in northern Illinois, southern Wisconsin, northern Indiana, most of Michigan, and parts of Ohio. Temperatures are below freezing in some areas, but it’s unlikely to get cold enough to do damage to crops.  

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