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Early Call 8:45am EDT: Corn steady, soybeans down $.02, wheat down $.02. Grain

and oilseed markets opened Sunday's overnight session with contracts trading higher,

but markets couldn't hold early gains. Other commodities were mixed, despite a lower

U.S. dollar index. Gold posted a rally while crude oil was near unchanged. DJIA futures

also rallied.

Grains: Grain and soybean futures were steady to higher on Friday as harvest

difficulties deflected some pressure from other markets. Contracts were initially mixed.

Sharply lower prices for crude oil and falling commodity indices pressured agricultural

markets, as traders exited the sector ahead of the weekend. A higher dollar, meanwhile,

made U.S. crops more expensive in the export market. But grain and soybean futures

turned higher on a series of factors that traders bet could help control the surplus of

crops going forward. Rain in the U.S. this week delayed harvest activity, which is

already behind the pace of recent years. That slowed the flow of new crops into cash

markets, though ample leftover supplies from last year limited the upside. Dry weather

in Brazil, meanwhile, is delaying planting there and helping support soybean prices. The

USDA also said that private exporters reported sales of 195,000mt of corn to unknown

destinations for delivery in 2017-18. The pace of soybean sales announcements slowed

this week in part due to a public holiday in China. Some expected them to pick up again

next week. Corn futures for December delivery rose 0.1% to $3.50 a bushel at the

Chicago Board of Trade. November soybean futures rose 0.4% to $9.72 1/4 a bushel.

Wheat futures were also higher as traders bet that relatively low prices for the grain

would attract buying interest. CBOT December wheat futures climbed 0.6% to $4.43

1/4 a bushel.

Isolated showers fell in Mato Grosso, Brazil over the weekend, with the wettest weather

in far northern RGDS, Parana and southern Sao Paulo. Parana rains will ease until the

11-15 day period, with the wettest weather in the already saturated state of RGDS,

leading to wheat harvest delays and quality concerns. Weather models show wetter

weather in the dry center-west/center-south region in the 11-15 day period, but based on

Daily Grain / Hogs Marketing Outlook Written by: Jim Gerlach

10/9/2017

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recent performance, confidence is still

low. Rains are needed to ease early

stress in northern Brazil (see 10-day

EU model forecast). Wetness eases in

the northeast ¼ of Argentina the next

two weeks, with surplus moisture

mainly in the southwest 1/3rd of the

belt. In the U.S., rains slow Midwest

harvest tomorrow and next weekend,

but will aid Midwest/Delta SRW

wheat. Drier conditions in the southern

Plains improve wheat seeding the next

10 days, with a hard freeze in the

central Plains not damaging crops.

The Buenos Aires Grains Exchange said 17% of Argentina’s corn crop is now planted

vs. 10% last week. They also said about half of the 13.3 million acres of Argentina’s

wheat acreage is currently impacted by excessive moisture levels. France’s corn crop is

15% harvested, with 80% rated good/excellent. Wheat seeding is 8% complete.

Brazilian analytical firm Safras and Mercado increased their 2017/18 Brazilian soybean

production estimate 1.5mmt to 114.7mmt. They are also projecting 2017/18 soybean

planted area at 87.82 million acres. Russian consultant's SovEcon raised their 2017

wheat production amount for the country to 82.9mmt. Saskatchewan farmers were able

to get back into the fields following several days of rain delays last week, and 89% of

the provincial crop is harvested, according to the provincial ministry of agriculture.

Harvest was ahead of the five-year average of 82%, according to the ministry. Yield

estimates remain average overall.

Look for U.S. corn harvest this afternoon near 25% while soy advances into the 32-35%

area. The trade on Thursday’s crop report is looking for a 20mb increase vs. Sept for the

U.S. corn crop to 14.204 billion bushels and a 16mb gain in the soy crop to 4.447 billion

bushels. Over the past 20 years, from September to the January report corn yields were

raised 14 times for an average of 2.2% (equivalent of 173.7bpa). There were 6 years of

declines that averaged 2.5% (implying this year at 165.1bpa). Soybean yields over the

past 20 years have been raised 11 times from September to January. The average

increase would be 5.1% (implying 51.9bpa this year). That average computation

includes three dramatic years of changes (2003 +10.4%, 2004 +9.3%, 2012 +12.2%).

2017/18 U.S. corn stocks expected to advance 54mb to 2.289 billion bushels. Soybean

stocks are pegged down 28mb to 447mb and wheat stocks up 13mb to 946mb. The

national yield reporting network we participate in thus far has pegged corn yields at

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199.4bpa vs. 209bpa last year, 210bpa in 2014 and 190bpa in 2015. Yields have risen

from 193.7bpa two weeks ago and 196.7bpa last week. On the other hand, soybean

yields stand at 63.3bpa vs. 65.8bpa last year, which was the record. Contrary to corn,

yields on soybeans dropped 1.1bpa last week from 64.4bpa, but remains higher than two

weeks ago at 62.6bpa. However, yields are well above the 58-59bpa average in 2014

and 2015. It will be interesting to see if these trends continue, although I suspect corn

yields will fall a bit as we get into all of the May replanted corn. I strongly believe that

heading into Thursday’s report, with only 3 things than can happen (bullish,

bearish or neutral), anything of short of bearish data should confirm that seasonal

bottoms have already been scored. Even on a minorly bearish report, I expect to

see traders “buy the bad news.”

Supply markets are often quiet markets and we certainly see that is the case across the

entire grain complex recently. December corn has had a lifetime $.71 range versus a 15-

year average of $2.19. Beans have been throttled in a $2 range for over a year and wheat

acts like it wants to kiss loan levels one more time as it most surely is making a long-

term bottom. Times of world surplus negatively impact our prices as export markets

diminish. This year we look back at a declining U.S. market share of all world trade.

The strong prices for oilseeds and grains 3 to 6 years ago created economic incentives

stimulating world competitors and we are now paying the price. If we were to look for

one key factor or risk point in world prices, we would probably look at the huge

percentage of world soybean trade being consumed by China. This is a country that has

little local production and a country that has changed the diets of it’s citizens in

dramatic fashion utilizing vegetable protein. Their demand could be termed “inelastic,”

a dangerous situation for all world users, particularly if South America would

experience a major crop reduction. Spring wheat could also be considered a grain with

significant inelastic demand from

the Far East and look what happened

to protein prices this year, a 50%

increase in prices in only 45 days.

Once again, Nov soybean futures

prices dipped to the 40-day moving

average line and bounced back up as

well as the support trendline drawn

off the August low (see chart). The

past week's low at $9.52 occurred

within a short-term cycle timing

window, but possibly more

important is that it has occurred

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within the October 2-9 time period, when the bean market normally posts the October

low. I assume that the USDA report on Thursday will either confirm or nullify this past

week's low as being significant. If the uptrend continues, the market will encounter

meaningful resistance at the $9.87-$9.88 level. Additional resistance is found between

$9.98-$10.00 followed by highs made in July at $10.35 and $10.47. If the market fails,

it's important that initially the $9.52 level holds otherwise the door is opened for a move

down into the $9.30's, with the August low of $9.21 as the backstop.

With little fresh grain news, traders are paying increasing attention to the macro

markets. U.S. Equity Indexes had another record close for the eighth session in a row

last Thursday, its longest string in 20 years! All three of the major U.S. stock indexes

have set more than 40 record closing highs this year. The Dow is now closing in on

23,000, a level that if hit will mark its fourth straight 1,000 point climb over the past 12

months. According to the Wall Street Journal, that would be the largest number of 1,000

point moves within a calendar year in the benchmark’s history. The Dow broke through

20,000 in January; 21,000 in March; and 22,000 in August. Also, the dollar rose to its

strongest in 10 weeks on Friday and short-dated U.S. Treasury yields climbed to a nine-

year high, after data showing the largest gain in U.S. wages since December 2016

bolstered bets on an interest rate hike by year-end. Inflationary pressures should also be

friendly to commodity prices.

On the demand front, Asian crude palm oil price futures ended 0.2% higher Monday on

expectations of a drop in production and lower inventories. Investors are upbeat ahead

of a crucial report to be released by the Malaysian Palm Oil Board on Wednesday.

Gains in soy oil prices have also been price-supportive. Trade publication Oil World is

looking for a decline in U.S. soy shipments Sept/Feb 2017/18 despite an expected

5.9mmt increase in global soy exports. Russian wheat advanced to a two-month high

amid brisk exports. Russian wheat-export prices gained 0.5% to $193/mt last week,

according to data from the Institute for Agricultural Market Studies, or IKAR. Russian

wheat exports increased 12% over last year through Oct 4th. Ukrainian wheat rose 1.3%

to $190/mt last week, according to analytical firm UkrAgroConsult. House Ag

Chairman, Mike Conaway, went north to Canada this weekend to "communicate a sense

of urgency" regarding the NAFTA renegotiations. Time will tell if the meetings do any

help.

CFTC data released

Friday afternoon showed

spec funds adding 9,759

contracts to their net short

position in corn futures

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and options in the week ending October 3. That net position was 143,201 contracts, the

largest net short position they have held since late May. The report showed soybean

futures and options spec traders trimming their net long position by just 562 contracts to

27,758 contracts as of Tuesday. Managed money backed off their net short position in

CBOT wheat futures and options by another 8,224 contracts to 56,475 contracts last

week. In KC wheat futures and options, they lowered their CFTC net long position

1,950 contracts to 9,468 contracts.

Hogs: Cash hogs are called steady/firm. The impressive recovery seen last week is

expected to continue, at least for a bit longer. Processing margins remain excellent, and

early October numbers seem more manageable. The national bid lost $.11 to close at

$52.03, while the IA/MN bid gained $.70 to close at $58/74. The CME Lean Hog Index

for 10/4 was $.36 higher than the previous day at $55.33. The USDA pork carcass

cutout value was $.27 lower at $72.61 on slow movement of 236 loads. Estimated

packer margins were $33.95/head for non-integrators and $24.76/head for integrators vs.

$35.99 and $25.41 the previous day. Weekly kill was up 4.04% vs. a year ago, with

pork production up 4.4%. August U.S. pork exports were 418.004 million lbs,

minimally higher than last year. It would still likely be considered a slight

disappointment. Exports in June were +4% while July levels were -3% with last year.

Year to date exports are 9% over last year. August imports of 99.511 million lbs. were

2% under last year. We’re seeing very strong seasonal pork demand, even if product

prices did not rally that much last week. It is difficult to move these record levels of

hogs and pork without significant discounting, and apparently the significant

discounting already in place is helping to move it all. In the reporting week ending Oct.

3, noncommercial traders were net buyers in the lean hog market, increasing their net-

long position by 13,300 contracts to 38,600. Bumping its head on the 40-day moving

average, soon-to-expire October lean hog futures closed under psychologically-

supported 60 on Friday. Furthermore, the $4 plus discount of the cash index could be a

further drag through Friday.

Lean futures should open on a mixed basis with nearby contracts losing ground to

deferred. Hog futures fell sharply Friday as traders locked in profits on a multi-day rally

this week. October lean hog contracts at the Chicago Mercantile Exchange fell 2.9% to

59.175 cents a pound. Prices were still up almost 7% for the week. Friday's selling was

driven in part by bets that the futures market was out of step with cash prices for

slaughter-ready hogs. Dec hogs are a $7.82 premium to the cash index vs. the 5-year

average of a $7.68 discount! Cash hogs have gone down 17 of the last 20 years

during October and the increase in production from the 3rd to 4th quarter this year

is the second highest increase on record and highest in the last 10 years. The

October contract was above average cash prices and the CME Lean Hog Index, which

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tracks the cash market. Both the index and the October contract should converge when

the latter expires this month. Despite strong recent gains in the cash market, analysts

said, traders bet futures would have to fall in order to meet the index. Estimated hog

slaughter numbers this week were largely steady from a week earlier at 2.524 million

head, the U.S. Department of Agriculture said. Growing processing capacity is expected

to push that number higher in the coming months. Cattle futures, meanwhile, were

higher on Friday. CME October live cattle futures rose 0.8% to $1.11025 a pound. The

bulk of the week's cash trade hadn't happened as of Friday morning, analysts say, as

meatpackers and feed yards continued to haggle over prices for cattle. Supplies of

slaughter-ready cattle rose this week, but early trading suggested that prices would be

mostly steady from a week earlier. Meatpackers have largely paid $108 per 100 pounds

live so far this week, though a few hundred head of cattle traded in the western Corn

Belt for $110 on Thursday, the USDA said.

The U.S. pork industry continues to grow at a measured pace. The Sept 28 USDA Hogs

and Pigs report indicated a 2.5% increase in the nation's inventory from a year ago, with

the breeding herd number up 1.2% and kept for marketing numbers up 2.6%. Those

numbers were pretty close to pre-report estimates, says Ron Plain, Extension livestock

economist with the University of Missouri. He says the report shows the pork industry is

doing well, and should remain profitable through at least 2018. One number that was

surprising was the June-August farrowing intentions figure, which came in at 1.5%.

"That would be the 12th time in the last 13 quarters that the number will be higher than

expectations," Plain says. "It shows the industry has recovered from PED more quickly

than we thought, and that we continue to do very well on breeding and reproduction."

Disease issues in Manitoba continue to impact feeder pig numbers heading south, says

Kevin Grier, a market analyst from Guelph, Ontario. That in turn impacts hog numbers

in the Iowa and Southern Minnesota markets, he says. Grier says about 10,000 fewer

pigs per week were heading south out of the Canadian province, but says producers

seem to be winning the battle with PED. Since the report came close to pre-release

estimates, price forecasts for the next year remain virtually unchanged. Plain expects

fourth-quarter pigs to average in the $50-$54 range on a lean basis, with first-quarter

prices from $58 to $62, second-quarter prices from $68 to $72, and third-quarter prices

averaging between $67 and $71. Grier says he is a bit more bullish, with most prices

about $2 more than Plain's forecast. Plain says with inexpensive feed and optimism in

the futures market, 2017 and 2018 should both be profitable. Along with feed costs,

added packing capacity has helped continue to fuel expansion. Plants in Sioux City and

Coldwater, Mich., both opened earlier in September, and should continue to increase

production as start-up issues are resolved. Plain says even with cheap feed, he suggests

producers look at locking in prices for corn and soybean meal. "There is a lot of grain,

and I'd be inclined to make sure I stay priced ahead," he says. Plain adds it appears the

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bottom in the winter hog market will come earlier than normal. "I don't think this would

be a good time to be hedging hogs," he says.

Weather: Today's U.S. and European models are in good agreement during the outlook

period, except that the U.S. model is just a little deeper with a short wave trough as it

moves across the north and northeast areas of the Midwest region early in the outlook

period. This short-wave trough may lead to scattered thundershowers early in the

outlook period, favoring north-central and northeast areas, and a little cooler weather

trailing the shower threat. The mean maps at 8-10 days are notable due to the lack of

high latitude blocking on either model. Late last week, the U.S. model featured a good

deal of high latitude blocking while the European model did not. Yesterday and today

the models are in agreement on the overall pattern. We note a strong upper level trough

over the Gulf of Alaska that extends to a strong polar trough located just south of the

Arctic circle in far northern Canada on these maps. There is a strong west to east flow

running over the northern tier of U.S. states and extreme southern Canada. We also note

near to above normal heights covering the southern, central and a little of the northern

U.S. on these maps. Temperatures at near to below normal would most likely be

confined to the far northern U.S. and southern Canada, near and north of where the

strongest west to east flow occurs. South of these areas above or well above normal

temperatures would be the rule. Rainfall after the early period chance mentioned above

would be fairly limited under the strong west to east flow and even less to the south of

this zone.

Rains of .50-1.5”+ fell across the SE 1/3rd of MN, most of IA, WI and eastern NE, with

totals of .25-.75” impacting most of IL, IN, MI and OH. The only area to miss the rains

was the NW 2/3rds of MN. Temps ran a bit above average, with highs in the 60’s north

and 70’s and some 80’s south. Lows were in the 50’s in most cases. Some challenges to

harvest activity will occur in the next 10 days, but there will also be enough dry weather

to allow some work to get done. An area of low pressure will bring fairly soaking to the

central Midwest tomorrow, otherwise things look to be dry across the region this week.

By the weekend, another area of low pressure will bring another round of fairly soaking

rains to the same general areas, with lighter totals elsewhere. The first half of next week

looks to be mainly dry. Temps will be running average to above average through most

of the next 10 days, with no good chances for any kind of a freeze across the region.

Rains of .50-1.5” fell across the eastern ½ to 2/3rds of KS, with totals of .30-.80” in

central OK. Things were dry elsewhere and temps were above average, with highs in the

80’s and lows in the 50’s. A few hit and miss rains will in the next 2 days and look to

bring light to moderate totals that will fall mainly in far northern KS as well as the

eastern 1/3rd of KS and OK. The rest of the week and most of the weekend and early

next week look to be dry as well, with some light rains to impact northern and eastern

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KS, as well as eastern OK by late in the weekend. Temps will be running average to

above for most of the next week to ten days.

Rains of under .35” were scattered across around 65% of the Argentine and northern

Brazilian growing regions over the weekend, with totals of .50-1.5”+ falling in RGDS,

Santa Catarina and Parana. Some 2-3” totals were reported from northern RGDS and

western Santa Catarina. Temps were near average, with 70’s in Argentina and 80’s and

some 90’s in most of the Brazilian growing regions. Scattered showers will bring totals

of .20-.80” to around 45% of the Argentine growing regions this week, with the activity

to favor the far east. Continued rains are seen for the southern Brazilian growing

regions, with another 1-2”, isolated to 2”+, falling this week. Things look to be mainly

dry in the northern Brazilian growing regions. The 6-10 day forecast continues the trend

of above average rains for southern Brazil, with below average results in Argentina and

the northern Brazilian growing regions. Temps look to run average to below in

Argentina and average to above in Brazil for most of the next week to ten days, but

nothing threatening.

North American Weather Highlights: Post tropical Nate is currently moving rapidly

towards the northeast over the northeast U.S. early this morning. The system brought

heavy rains and strong winds to Alabama yesterday. Rain and thunderstorms due to this

system also impacted west and north Georgia, the western Carolinas, Tennessee and

Kentucky and to a lesser extent southeast Indiana and Ohio. Harvest disruptions and

delays continue early this week in the Midwest due to rains late last week and more

early this week. Slow improvement is possible later this week, although some may see

more rain this weekend. Recent rains in the central/southern Plains provide favorable

soil moisture for germination and early development of winter wheat. Rains may have

slowed planting progress somewhat, but conditions for planting should improve this

week. Cold temperatures early this week will slow development of early planted wheat

for a time. Heavy rain and strong winds in the Delta associated with tropical storm Nate

occurred in Alabama and western Georgia during the weekend period. This likely will

delay harvest progress for a time. Wet conditions have been slowing harvest progress

somewhat, but a drier period is setting up and should be more favorable.

Global Weather Highlights: Recent rains in Brazil will favor more widespread soybean

planting. However, a turn to hot and dry weather at this time and lasting for much of the

ten-day period should reduce soil moisture again and increase the risk to recently

planted soybeans. Weekend rains from Parana southward should provide favorable soil

moisture for early planting in these locations. Favorable soil moisture occurs for

upcoming corn and soybean planting in central Argentina. Some early corn planting is

underway. Moderate to heavy showers and thunderstorms covered most crop areas of

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Queensland, Australia and extreme northern New South Wales early last week.

Significant rainfall has also redeveloped in northern New South Wales during this

weekend. These rains will significantly improve soil moisture and irrigation in key

cotton and sorghum areas leading to improved prospects for these crops. Rain and

showers may help stabilize the condition of filling winter wheat in the region as well.

Dryness remains of some concern in South Australia, Victoria and southern NSW at this

time. Significant rain and thundershowers have moved into Moldova, South Ukraine

and central Ukraine during the weekend period. This will improve prospects for planting

winter grains following a very dry summer and early fall period. The rain has yet to

reach all the way through eastern Ukraine or into south Russia. These locations still

need rain to ensure favorable development of winter grains prior to winter dormancy.

Macros: The macro markets were lightly mixed as of 8:30am EDT, with Dow futures

down 0.1%, the U.S. dollar index is unchanged, crude oil is up 0.8% and gold is 0.2%

higher. The S&P 500 on Friday closed 0.11% lower, breaking a string of 8 straight

higher closes. The DJIA lost 0.01%, while the Nasdaq gained 0.12%. Bearish factors

included ramped up expectations for a Fed rate hike in Dec after U.S. Sep average

hourly earnings rose 2.9%, stronger than expectations of 2.6% and the largest year-on-

year increase in 8-1/4 years, and increased geopolitical tensions after Russia's news

agency reported that North Korea may test a long-range ballistic missile over the

weekend. The U.S. markets this week will focus on geopolitics as the markets wait to

see if North Korea conducts another missile test, any news on President Trump's

progress in choosing a new Fed chairperson, the reaction of petroleum and natural gas

prices after Hurricane Nate made landfall on Sunday near New Orleans as a Category 1

hurricane, any progress by Republicans on formulating a tax reform package, FOMC

policy with the release of the Sep 19-20 meeting minutes on Wednesday and with nine

different speaking engagements by Fed officials this week, and the beginning of Q3

earnings week with 11 of the S&P 500 companies scheduled to report. This week's U.S.

economic calendar is light with the focus on Friday's Sep CPI and retail sales reports,

which are both expected to be boosted by hurricane effects. Friday's Sep CPI is expected

to show an increase to 2.3% from Aug's 1.9% due to higher gasoline prices, and the core

CPI is expected to edge higher to 1.8% from Aug's 1.7%. Friday's Sep retail sales report

is expected to surge by 1.6% due to strong hurricane-related vehicle sales, but ex-autos

sales are also expected to be strong at 0.9%.

The petroleum markets are on edge as President Trump is tentatively scheduled to give

a speech on Thursday in which he will reportedly announce that he will refuse to certify

Iran's compliance with the nuclear agreement, a decision that must be made by this

Sunday's (Oct 15) deadline. Such a decision would open a 60-day window for Congress

to vote to reimpose nuclear-related sanctions on Iran. However, Congress is not

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expected to reimpose those sanctions and

is instead expected to simply let the 60-

day period lapse, leaving the U.S. still

firmly within the Iran nuclear deal. On a

separate track, Mr. Trump could still

effectively remove the U.S. from the Iran

deal by refusing to waive sanctions

against Iran by an upcoming deadline of

Jan 12. The European markets are on

edge as they wait to see if Catalonia's

parliament will unilaterally declare

independence when they are due to meet

on the Tuesday. Catalonia's parliament was originally scheduled to meet on Monday but

Spain's Constitutional Court blocked that session, prompting the delay until Tuesday.

Over the weekend, there was a large public demonstration of several hundred thousand

people against independence and a growing number of large banks and companies based

in Catalonia are threatening to move their headquarters to ensure that they remain within

the Spain and the EU. Catalan President Carles Puigdemont on Sunday said he will

nevertheless move ahead with declaring independence. Spanish Prime Minister Rajoy

has yet to indicate whether he will use a provision of the constitution to assume full

political control of Catalonia and prevent any independence moves by the regional

government, which could eliminate the short-term independence threat but could also

cause civil unrest and stoke more resentment against the Spanish central government

over the long run.

Overnight, Bloomberg News reported that European stocks edged higher, led by

equities in Spain after a weekend of mass demonstrations in Catalonia in favor of

Spanish unity. Sterling gained as Prime Minister Theresa May looked poised to reassert

her leadership, while Turkey’s lira tumbled amid tensions with the U.S. The Stoxx Euro

600 Index also received a boost from data showing German industrial output rebounded

from a summer lull with its best month in six years. Spain’s IBEX Index jumped as a

senior member of the Catalan administration called for dialogue with Spain, warning

that all of Europe faces economic damage unless a resolution is found. The euro nudged

higher, while most European bonds rose. Crude oil and gold both climbed. Turkey’s lira

plunged to a record low against a basket of currencies including the euro and the

dollar, and the nation’s stocks slumped. There was little sign of broader emerging-

market contagion, though, with an index of developing-nation currencies steady. The

U.S. and Turkey each suspended visa services for citizens looking to visit the other

country.

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Elsewhere, stocks in Shanghai rose as traders returned from holidays. The U.S. bond

market will be closed for the Columbus Day holiday Monday. Markets including Japan,

Korea and Taiwan are also closed. The Stoxx Europe 600 Index increased 0.1 percent

as of 10:17 a.m. London time. The MSCI All-Country World Index rose less than 0.05

percent. The U.K.’s FTSE 100 Index fell 0.1 percent. Germany’s DAX Index rose 0.1

percent. Spain’s IBEX 35 Index rose 0.6 percent. The MSCI Emerging Market Index

sank 0.2 percent. Futures on the S&P 500 Index increased 0.1 percent. The Bloomberg

Dollar Spot Index declined less than 0.05 percent. The euro rose 0.1 percent to $1.1738.

The British pound climbed 0.4 percent to $1.3119. Turkey’s lira fell 2.3 percent to

3.7008 per dollar, the biggest drop in about 15 months. Germany’s 10-year yield fell

one basis point to 0.45 percent. Britain’s 10-year yield was unchanged at 1.363 percent.

Spain’s 10-year yield fell six basis points to 1.645 percent. West Texas Intermediate

crude rose 0.1 percent to $49.34 a barrel. Gold climbed 0.4 percent to $1,282.03 an

ounce, the highest in more than a week. Copper fell 0.2 percent to $3.02 a pound.

Summary: The agricultural markets will remain open for Columbus Day today,

however all USDA reports will be delayed until Tuesday. For the week, Dec corn was

down $.05 ¼, Nov soybeans were up $.04, Dec wheat was down $.04 ¾, Dec meal was

up $1.05 and Dec oil was up 13 points. Corn traded slightly higher Friday, but the trade

remains range bound as traders wait for more yield reports and the USDA’s monthly

supply and demand report on October 12th. Outside markets were lower, but corn

managed to stay slightly supported after the USDA reported that exporters sold

195,000mt of corn for delivery in the 2017/18 marketing year to unknown destinations.

Several reports from private analysts predict higher yields and the prospect of an

upward revision in the USDA’s yield estimate is hanging over the market. For now,

early yield reports from the field are few and far between as rains stall fieldwork in

many areas of the Corn Belt. According to a Bloomberg survey, expectations for the

October 12th WASDE report indicate an anticipated corn yield of 169.8bpa vs. the

September USDA yield of 169.9bpa. Production is expected to come in at 14.171 billion

bushels vs. the September number of 14.184 billion bushels. French corn harvest

progress is at 15% as of October 2nd, which is ahead of last year’s pace of 9% complete.

Soybean futures traded higher finding light support from rains in key production areas

that have harvest creeping along slowly. The market lacks fresh news and will await the

release of Thursday’s WASDE report. According to a Reuters poll, Brazil’s expected

soybean output will reach 109.98mmt in the 2017/18 crop season. This a reduction from

a previous poll in August that expected output to come in at 110.60mmt. China will be

back in the markets today after a week-long holiday last week. Expectations are that the

world’s biggest bean buyer will be back with an appetite as they look to cover needs for

the month of November. A Bloomberg survey indicates average trade estimates for

Thursday’s WASDE report expect soybean yields to be unchanged from the September

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report at 49.9bpa while production will be slightly increased at 4.437 billion bushels.

Brazilian soybean shipments in September were very strong, totaling 4.27mmt. This

was an increase of more than 300% from the previous year. All classes of wheat traded

higher Friday. Gains in Minneapolis appear to be technical in nature as there is little

fresh news in the world of wheat. There are talks that Russia may look at removing their

wheat export tax after bumper crop year. Russian analytical firm SovEcon increased its

expectations for the 2017 wheat crop by 1.8mmt to 82.9mmt. France reported that it

exported 1.39mmt of soft wheat in the month of August, which makes for a season total

of 2.55mmt since July. French exports are currently up 28% year on year.

November soybeans closed higher Friday, marking the third consecutive session of

gains. Last week's bullish recovery marked a rejection of weakness to the $9.52 1/2 low

hit on Oct. 3. November beans posted a weekly close above its 10-day and 20-day

moving averages, which is a short-term bullish trend signal. On the upside, bean bulls

see first resistance in the $9.76-$9.78 1/4 region. A solid rally through that zone would

be needed to open the door for a run back toward major resistance at $9.87, the Sept. 22

daily high. The 20-day moving average is first support and as long as that holds, bean

bulls will retain the short-term technical edge this week. December corn settled little

changed Friday and slightly weaker on the weekly chart. Last week's action tugged

December corn to the lower reaches of its five-month neutral trading range, but failed to

break out of the range. The short-term trend bias is bearish within a well-defined

consolidation range. Since Aug. 31, December corn has been biding its time between

resistance at $3.62 and support at $3.44 1/4. The retreat toward $3.46 last week attracted

light buying interest, but overall market tone remains lackluster. Corn isn't in a strong

trend environment. December corn is in a holding pattern awaiting a fresh trend trigger.

It would take a bullish breakout above resistance at $3.62 to turn the near-term trend

bullish, and open the door to a new buying wave. Conversely, a selloff below support at

$3.44 1/4 leave corn vulnerable to a new selling wave. On the downside, a weekly

continuation bearish objective lies at $3.28 1/2.

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