- Chicago is mixed at midday with corn futures slightly lower while soybeans/wheat hold firm. November soybean futures have been the upside leader on Cargill’s stopping of November deliverable receipts which has narrowed the November-January soybean spread to a 12 cent January premium. Corn remains a laggard amid tepid US corn export sales and the narrow window for the US to recapture lost demand amid aggressive Ukraine fob corn offers. December corn once rejected resistance at $3.92. Chicago is holding in a choppy sideways trade with cash merchant’s hopeful for improved grain sales as farmers restart their harvest next week amid cold/dry weather. We are not expecting much pre-weekend hedge pressure amid all the rain/snow that has fallen in recent days. Midwest fields are saturated.
- Chicago brokers estimate that funds have bought 3,400 contracts of soybeans and 3,100 contracts of wheat, while selling 3,600 contracts of corn.
- FAS reported the sale of 132,000 mt of US soybeans to China for shipment in the 2019/20 crop year. The sale shows that Chinese crush interest is noted on breaks, but no Chinese importer appears to be willing to chase a rally.
- There has been considerable talk about tightening S American corn fob offers with prices no rising on a seasonal basis. Brazil has committed to export a record amount of corn and interior corn prices spiked earlier in the week, but have since retreated. Brazilian farmers still have old crop corn to sell and it appears that USDA has understated last year’s crop or has overstated domestic use. We do not see a dire shortage looming for Brazilian farmers are we are doubtful of Brazil shifting corn export offers to the Ukraine. Brazil normally ends its corn export program in December or early January and that same trend should exist this year. We do not sense domestic Brazilian corn shortages into year end.
- Brazil has changed its biodiesel blending requirements 1% each year into 2023. B12 will be mandated in March of 2020, B13 in March of 2021, B14 in March of 2022, and B15 in March of 2023. Soyoil exports will be trimmed and it should produce future gains in crush that will add to exportable soymeal availability/supplies. The Brazilian legislative biodiesel mandates should further rally oil/meal margin contributions to crush over time.
- The WTO indicated today that China can impose tariffs on up to $3.6 billion of US goods over the failure of the US to abide by anti-dumping rules. The Chinese win was third largest in history from the WTO arbitrator. China has a host of claims against the US, but today’s award took seven years from its filing to wind through the complex WTO trade progress. It all takes lots of time.
- Consistent with the overnight run is the 122 forecast with largely dry/cold temperatures for another 7-9 days. A ridge of high pressure will build across the Western US which will lift the jet stream northward across the Western US and allow the flow of Pacific air to flow eastward with time. This will allow temperature moderation after November 9 from west to east. Cold Canadian is pushed north and east. Precipitation will be limited across the Central US into mid November allowing the harvest to accelerate. Corn cutting will be featured.
- It has been a technical Chicago trading session today with the charts and the stopping of November deliverable receipts delivering the direction. We have heard rumours that China is showing interest in US sorghum and Hi Pro wheat. Tonnages sought are said to be moderate at this time. Corn prices are pressured via the favourable forecast for advancing the Midwest corn harvest.
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