Overnight low temperature watch begins

Wheat

The spring wheat market continued its rally on harvest delays and quality concerns. The Chicago and Kansas City markets were largely subdued with normal fall planting progress being reported.

Spring wheat harvested is at 87% compared to 97% for the five-year average. Winter wheat plantings are at 22% compared to 24% for the five-year average. Areas in northern North Dakota and northwestern Minnesota received 5 to 7 inches of rainfall over the past weekend.

Manitoba agriculture showed seven-day rain accumulations of 2 to 5.7 inches through most of their southern province ending Sept. 22. Saskatchewan showed 1 to 2 inches in their southeastern region for the period ending Sept. 16.

According to the most recent weekly crop reporting data, Manitoba is 71% harvested compared to 91% average. Saskatchewan spring wheat harvest is 23% complete versus 50% for both five- and 10-year averages. Alberta is only 14.7% harvested compared to 40% for the five-year average. Four to 10 inches of snowfall is expected across the southern third of Saskatchewan and Alberta and northern Montana early next week.

Russia increased its official wheat estimate 3 million metric tons from 75 million to 78 million metric tons. The U.S. Department of Agriculture is currently at 72.5 million metric tons. Egypt tendered for an unspecified amount of wheat with France or Russia as the low bids. It was reported that Russian bids were $2 higher than France, but freight proximity of the Black Sea Region still giving them the advantage. In the end, France got the business.

Matif wheat futures recently have been running to the bottom to try and be cheaper than Russia. The U.S. dollar has been relatively strong and U.S. wheat is simply too expensive in the world market. Matif wheat futures weekly charts show a low of $165.75 per metric ton on Sept. 3. (When the September contract was active). December with the carry has established a current trading range between $170.25 per metric ton and $172.50 per metric ton. A settlement above or below these levels would set the market for a $5 per metric ton move to either the $177 or $165 levels that are considered strong resistance and support levels. In the short term, expect Matif direction to dictate Chicago and Kansas City movement.

Wheat export sales were at the lower range of expectations at 283,000 metric tons (10.4 million bushels). Total commitments are up 16% versus last year. The last four weeks have seen a slower pace, as we we were running in the plus-25% area compared to last year's pace as recently as three weeks ago.

The Australian Weather Bureau stated that the drought conditions are likely to persist for the next three months across the eastern part of the country. Last year's Australian drought stressed crop was 17.3 million metric tons. Recent estimates from USDA and private forecasters are in the 19 million metric ton range.

The $5.60 area is an initial resistance area in Minneapolis December. This level held in Sept. 26 trade. If we can bust through that, $5.80 would be the next upside target; $5.43 to $5.45 is current support.

For the week ending Sept. 26, December contracts for Minneapolis wheat were up 24.5 cents at $5.4875, unchanged at $4.8425 for Chicago wheat, and up 0.75 cents at $4.0825 for Kansas City wheat.

Corn

Corn futures had a hard time finding bullish news this week as December prices hit but were pushed back off the six-week highs of $3.77. The trade does not seem willing to buy into this market at this level until either the first frost hits in the next couple weeks or if yields continue to be reported as "disappointing" in major Midwest producing areas.

The trade is also nervous that the USDA will increase quarterly ending stocks again in their Sept. 30 quarterly report. Weekly export sales were disappointing this week and are sitting at 50% below this time last year. It is too early to panic about this as we are only three weeks into the new 2019-20 marketing year.

Ethanol plants are feeling the squeeze with the ongoing battle against big oil and the waivers. Ethanol production for this past week dropped to a three-and-a-half-year low. Ethanol stocks dropped slightly due to decreased production but are still at levels above last year at this time. Refineries continue to find a way around their renewable fuel volume obligations and are doing everything they can do to destroy the domestic ethanol industry and keep big oil's 90% market share. The latest bullet comes from the fact that the weekly ethanol imports for this past week were at a record high going back from when the Energy Information Administration started reporting weekly ethanol data in 2010.

The forecasts for the next seven days are showing average to above average temperatures and little worry for freezing temps. After that weather models have been starting to deviate from the warm fall, as a cold air system is a possibility that could bring freezing temperatures into the upper Midwest. This weather model will be watched carefully the next week. The first frost scare that is now forecast for the Dakotas, western Minnesota, and northwest Iowa is a possibility between Oct. 2-8.

One reason the weather needs to be watched is that U.S. corn acres were only 79% dented as of Sept. 22, the slowest denting pace on record. For this time of year, the five-year average is 94% dented and was 96% last year. Corn mature was only at 29% versus the five-year average of 57% and 69% last year.

The USDA announced that producers currently participating in federal crop insurance who, in 2019, experienced a payable prevented planting indemnity related to causes other than drought will automatically receive a "top-up" payment. More details can be found on the Risk Management Agency website under the news tab and then click on press releases.

As of Sept. 22 and after a 3% decrease the week prior, corn conditions recovered some due to the recent bout of warm temps and increased 2% to 57% good to excellent. The crop is rated 30% fair and 13% poor to very poor. As of Sept. 22, 3.6 million of the planted acres across the Midwest was still not at dough stage. Just shy of 19 million planted corn acres were not fully dented as we got into the last week of September.

Resistance is last year's fall high in the December 2018 futures contract that only got back up to $3.79 by the time the contract expired Dec. 10 after the contract lows were put in. Major December contract resistance will be the top end of the trade gap left between $3.88 and $3.9275 that was made Aug. 13. First support is the December 2019 contract low of $3.5225 set on Sept. 9. Major support will be the December 2018 futures contract low of $3.425 that was set on Sept. 18, 2018.

Soybeans

Soybean futures were relatively stagnant this week as November futures continue to trade in a 20-cent range below the $9 level the past two weeks. The trade has been unwilling to push futures one way or the other until they hear news from U.S./China negotiations in October and reports from the combines as the hit they heart of the Midwest. There has been a rash of sales of U.S. soybeans to China since Chinese officials announced that they may be waiving tariffs on up to 6 million metric tons (220.44 million bushels) of soybeans as a goodwill gesture ahead of trade talks. The amount of U.S. soybeans purchased by Chinese buyers so far since the tariff waiver announcement is thought to be around 1.8 million metric tons.

There was also an announcement that a tentative trade deal has been reached with Japan. It is being reported that once the agreement is implemented, approximately 90% of U.S. food and ag products exported to Japan will be duty free. Out of the $14.1 billion in U.S. food and agricultural products imported by Japan in 2018, $5.2 billion were already duty free. Under this first-stage initial tariff agreement, Japan will eliminate or reduce tariffs on an additional $7.2 billion of U.S. food and agricultural products.

The Illinois Corn Marketing Board signed a letter of intent from the Taiwan Industry Organization that Taiwan has committed $2.2 billion to purchase Illinois soybeans, corn and corn products over the next two years.

Weather will continue to be watched the next couple weeks as there is still quite a bit of crop that needs more time. The first frost scare has popped up for the year as forecasts show a small possibility of sub-32 degree lows from Oct. 2-8 for parts of the upper northwest states of the Midwest. As of Sept. 23, soybeans dropping leaves were well behind pace and was at 34% versus 59% for the five-year average and 68% last year. Crop ratings were unchanged at 54% good to excellent compared to 68% good to excellent last year. The crop is rated 33% fair and 13% poor.

New support is $8.525 that was the recent low set on Aug. 28. The November contract low of $8.155 set on May 13 recovery is major support after this.

The new high of $9.035 is new resistance. Major resistance is at $9.3125 on the weekly chart. On the daily charts, resistance is $9.365 and then the five-month high of $9.48 for new crop soybeans that was set on June 18.

Canola

For the week ending Sept. 26, November canola was up 0.20 at $447.60 Canadian per metric ton. The Canadian dollar was up .0005 at 0.7544. This brings the U.S. price to $15.32 per hundredweight.

• Velva, N.D., $14.17 per hundredweight, October at $14.17.

• Enderlin, N.D., $14.10 per hundredweight.

• Hallock, Minn., $14.26 per hundredweight, October at $14.60.

• Fargo, N.D., $14.60 per hundredweight, October at $14.55.

According to weekly crop reports, Saskatchewan and Alberta have only harvested 6% of their canola crop with 40% to 56% swathed or in condition to straight cut. Snowfall is expected across southern areas of both these provinces next week, which could add to lodging and quality issues.

Barley

Cash feed barley bids in Minneapolis were at $2.50, while malting barley received no quote. Berthold, N.D., bid is $2.75 and CHS Southwest New Salem, N.D., bid is $3.

Durum

Cash bids for milling quality durum are $5 in Berthold and at $6 in Dickinson, N.D.

Sunflower

Cash sunflower bids in Fargo were at $18.60, with October bids at $17.40.

For the week ending Sept. 26, soybean oil was down 27 cents at $29.01 on the October contract.