- HEADLINES: Soybeans rally to exceed last week’s high; China has halted request for US SRW on price; GFS midday weather forecast drier for N and E Brazil next 10 days.
- Chicago futures are sizably mixed at midday with Chicago wheat futures sharply lower, soybean futures sharply higher and corn caught in between. March corn futures fell to test key support at $4.75-4.60 while January soybeans held key support at $13.00 and January soymeal against $400.00. We note that January soyoil futures are holding support at $0.50 with a key NOPA crush report due out on Friday. The NOPA report could reflect a US soyoil end stock total of 950 million pounds of soyoil or less due to fresh renewable diesel demand. We maintain that Northern and Eastern Brazilian soybeans are enduring drought stress and the need for a soaking rain is growing in importance. Chicago soybeans are adding weather premium amid the potential for falling yields should the current below normal rainfall and above normal temperature pattern persist into January. Brazilian crops need to see a weather pattern change for the bears to feel comfortable enough to sell a sharp Chicago break.
- Chicago brokers estimate that funds have sold 6,800 contracts of Chicago wheat and 6,900 contracts of corn, while buying 8,500 contracts of soybeans. Managed money has bought 4,200 contracts of soymeal and 2,100 contracts of soyoil. Chicago has now pushed above last week’s high in January soybeans which triggered another round of fund buying.
- USDA reported the sale of 132,000 mt of US soybeans to an unknown buyer for delivery in the 2023/24 crop year. We understand that China has also bought another 2-4 cargoes of US soybeans for February/March. We see world ocean freight rates pushing even higher as vessel tonnage is tied up going around the horn of S America vs the Panama Canal. There are alternatives to the canal, it is just that there is cost to switching to the PNW or a longer duration voyage. China is still asking for offers on US corn but have halted their inquiries for US wheat.
- US export inspections for the week ending December 7 were 28.0 million bu of corn, 36.1 million bu of soybeans, and 10.3 million bu of wheat. For their respective crop years to date, the US has exported 361.4 million bu of corn (up 80 million or 22%), 725 million bu of soybeans (down 140 million or 16%), and 316 million bu of wheat (down 93 million or 23%). The trade will be closely following the shipping schedule of US SRW wheat sales to China.
- The GFS midday weather forecast is slightly drier in the week 1 forecast for Northern and Central Brazil with widespread 90’s and lower 100’s. The GFS forecast keeps backloading the forecast with rain, which is in low confidence due to recent forecast failures. For the next week, we look for Northern and Central Brazil to receive 0.2-1.25” of rainfall with coverage at no better than 45-50%. This leaves widespread N Brazilian areas in need of rain. S Brazil and Argentina will enjoy near to above normal rainfall and near normal temperatures with highs in the 80’s to lower 90’s. There is no indication of adverse weather for Argentine crops, which favours yield potential. It is N and E Brazil where an abundant rainfall profile is in immediate need.
- Holiday thinning volume exacerbates Chicago price moves into the end of the year. NOPA will release its November soy crush report on Friday which will be one of the most important reports of the year due to the determination of the 2023/24 soyoil yield (new crop) with member end stocks to drop below 950 million pounds. And US renewable diesel demand is again ramping up. Finally, Brazilian corn values are rising which underpins March Chicago corn below $4.80. March Chicago wheat has support at $5.90-6.00 due to recent Chinese offtake. Thursday’s USDA Weekly Export Sales Report to show massive new US SRW wheat sales to China.