- Ag markets remain weak at midday, with Chicago wheat futures down 8-9 cents. Tuesday’s rally in US wheat markets has found ample selling amid weak EU wheat futures and amid a broadly flat global wheat cash market. Overnight rainfall in Central Argentina has limited new buying in row crops. Other news was tough to find this morning.
- There are reports that Chinese state-owned companies have been securing modest tonnages of US beans this week for Dec-Jan arrival. FAS this morning confirmed that exporters sold 106,000 mt of beans to unknown destinations for 2019/20 delivery. US cash beans are competitive with the last of S American offers when tariffs are waived. Yet, there is also talk of soybean supply congestion at ports, with some US vessels waiting as long as 30 days to unload.
- China has been boosting reserve stocks following depleted stocks during the throes of US-China trade war. Other meaningful demand is lacking as uncertainty persists over future tariff easing. Recall the US has planned to implement 15% tariffs on $160 billion of Chinese goods.
- The midday Central US forecast is wetter beyond Nov 22. Two systems of note are projected to sweep across the E Plains and Midwest Nov 23-27, with cumulative totals (mostly rain) pegged at 0.50-1.50″ across IA, MN, WI and IL, where corn harvests ranges from just 30-70% complete. Confidence in this wetter pattern is low, but whether the EU model follows this afternoon will be monitored. Wheat producers across the W Plains also indicate that winter wheat conditions there have been weakening amid dryness and bitter cold temperatures. Much of the HRW Belt stays dry into late November.
- The wheat market will also be keen to know the extent of winter wheat acreage loss. RMA wheat insurance enrollment data is available on a weekly basis, but won’t correlate with changes in seeding until mid/late December. As of Nov 11, there are 2.4 million acres enrolled, vs. 2.9 million a year ago.
- Australian drought looks to persist into the end of 2019. Ongoing dryness there is now affecting sorghum planting and emergence. The goals of Australian grain markets nearby is to assure domestic supplies are adequate by slowing/halting export potential.
- The midday GFS weather forecast has shifted heavy Argentine rainfall a bit southward. Soaking totals are now projected to favour southern Cordoba and the whole of Buenos Aires. Heavy cumulative totals are still offered to a majority of Argentina’s primary Corn Belt, but key in the days ahead is whether the EU and GFS models come to agreement. The EU model this week has kept Argentine rainfall capped at 0.25-0.75″. The GFS projects totals upwards of 2-3″. Rain is needed there ahead of early corn pollination in December.
- Brazilian crop areas will see a steady stream of near-daily showers, with cumulative rainfall into Nov 28 pegged at a rather normal 1-2″ in the south and 2-6″ in the north. The S American outlook remains non-threatening.
- It remains that ag markets lack input. It is tough to be overly bearish until US-Chinese trade details are known. But the remainder of the week will feature ongoing slow US ethanol production data and a lack of US grain export improvement.