Grains were sluggish overnight with only soybeans showing significant movement, gaining 5 cents in the night trade. Corn and wheat were mostly unchanged in the overnight.
Friday’s USDA report did little to change the mood in the markets, as only modest changes in US supply had little stimulus for prices. Soybean production was slightly below trade expectations while corn production was just above trade expectations. Many traders still look for higher supply numbers in future reports, as this survey was based on conditions as of Oct 1, and farmers will have a better handle on supplies once harvest is further along.
One point of caution from Friday’s report was that USDA did not lower their corn exports for the marketing year, leaving them at 1,850 MB only fractionally below the previous year’s total of 1,864 MB. However, year-to-date export sales are 28 percent off the pace set last year.
For wheat, USDA substantially lowered their estimate of US supplies, but after dropping feed use and exports the end result on carryout was only a small reduction in stocks from 875 MB last month to 861 MB this month. Global carryout increased however, thanks to larger production forecasts in Australia, Canada and the EU.
In overnight news, Saudi Arabia bought 740,000 MT of hard wheat and France’s farm ministry bumped their wheat crop forecast to 41.0 MMT from 40.8 MMT last month.
In S&P (ESZ5) futures, prices were mostly unchanged going into the opening bell this morning. Global stocks rose on Monday, with investors betting on the Federal Reserve keeping interest rates steady through the rest of the year. The Fed is still likely to raise interest rates this year, unless global economic conditions push the U.S. economy off course, Fed Vice Chairman Stanley Fischer said on Sunday. The Fed pulling the trigger this year was "an expectation, not a commitment," he said. The Fed, which has not raised rates since 2006, has said it is waiting for signs of stable inflation before lifting rates off near-zero levels.
In crude (GCLX5 / QMX5), futures were up about 0.3 percent overnight but still below the pivotal $50 a barrel mark which it breached on Thursday & Friday’s trade. On Friday, Baker Hughes reported a decline in the active U.S. oil rig count for the fifth straight week, dropping by nine, bringing the total count to 605, the lowest since June 2010. Rig count is an important gauge of future production.
