- HEADLINES: Grains recover; Brazilian unrest fuels soy rally: Black Sea uncertainty continues.
- Chicago ag markets are again firm as wheat and corn recover despite relative strength in the US$ and as equity markets stay negative. Soybeans continue to lead the recent ascent amid unrest in Brazil, including the blockade of the primary road leading to the port of Paranagua, additional strength in the Real, and as recent cold temperatures in Southern Brazil and the return of prolonged dryness in Argentina at least warrant attention.
- ENSO forecasts continue to feature a warmer equatorial Pacific by mid-winter, but La Niña strengthens slightly in the weeks ahead. The beginning of Argentina’s soybean seeding season is imminent and it is critical that the better rain chances included in 8-14 forecasts verify.
- Argentina is likely to announce that exporters can reschedule previous wheat commitments at no cost, which disrupts/slows exports and which underscores the intensity of current drought conditions there. Updated data indicates subsoil moisture in Argentina remains limited following recent rainfall.
- There are reports of a call between Turkish and Russian officials that yielded nothing with respect to grain export execution in the Black Sea, with the UN reporting that Turkey and Ukraine have agreed not to plan vessel movement today. Over time, the market will have access to exact Black Sea export tonnages on a monthly basis, but debate will go on with respect to Ukraine’s ability to adequately ship corn from the interior to logistical hubs. Infrastructure damage is noted, and there is broad consensus that corn will be left to dry in the field to save costs. War in Ukraine remains disruptive.
- Paris milling wheat futures are up €3.00/mt at midday. Spot WTI crude is up $1.65 at $88.20 ahead of Wednesday’s EIA report that will again feature a decline in total crude and motor gasoline stocks. The Brazilian Real has rallied another 1% this morning, which places Brazil’s spot corn future at $7.17/bu, vs. $7.08 on Monday.
- The midday GFS weather forecast is further eastward with Plains rainfall this weekend. Totals of 1-2” are offered to far E OK/KS, but GFS output places the greatest accumulation across AR, MO, IA and WI.
- The midday GFS weather forecast in S America is wetter in Northern Argentina, including important regions of Cordoba, in the 10–15-day period. There has been general agreement between the EU and GFS models that better rain chances lie ahead of Argentina at mid-month, but confidence in forecast details beyond the next 8-10 days is low, and forecast are at odds regarding the intensity of Argentine rainfall Nov 10-14. Otherwise, Argentine dryness lingers in the near term. Dryness blankets all of Brazil into Nov 9-10, with a more progressive pattern of rainfall projected thereafter.
- The soy complex has found bullish vigour amid a strengthening Brazilian Real, uncertainty over S American politics nearby and as NASS’s critical Nov crop report looms. Wheat and corn will be tied to the market’s perception over Black Sea grain flows. Rallies will continue to be rewarded as it is difficult to identify the catalyst needed for sustained rallies outside of S American yield loss.