- Chicago futures are mixed at midday with the grains weaker while soy futures hold in the green on threatening S American weather and active US soy product demand. Chicago wheat has been the downside leader on $30/mt Russian export duty rumour, a 17.5 million mt export quota, with both starting on Feb 15 . We hear that although the Russian rumours are strong, the Government appears to have not decided on the duty, its start date or tonnage in the quota. Russian wheat traders are fearful of a January 15 start date with the export quota being cut to 15 million mt. The current proposal does not do enough to pressure domestic Russian wheat to 14,000 Rubles/mt as argued by the Economics minister. We anticipate a mixed Chicago close with the complex holding while wheat sags and corn is caught in between. Note that December futures contracts expire today.
- Chicago brokers estimate that funds have sold; 7,000 contracts of wheat, 4,300 contracts of corn, and 4,200 contracts of soybeans. In soy products, funds have sold 2,200 contacts of soymeal while buying 1,900 contracts of soyoil.
- The FAS/USDA daily sales report did not report any new purchases.
- US weekly export inspections for the week ending December 10 were: 34.9 million bu of corn, 87.0 million bu of soybeans, and 9.6 million bu of wheat. Last week’s US soybean export estimate was raised 11 million bu to an impressive 95 million bu. Based on vessel counts, we are looking for a 10-14 million bu upside revision in US soybean exports next week. For the US to be exporting nearly 100 million bu in early December speaks to the strength of Chinese and world demand. Argentina has not exported a soybean cargo in over 7 weeks, while just 1 boat sailed from Brazil last week. The US has a stranglehold on world soybean demand through mid-February.
- For the crop year to date, the US has exported 469.8 million bu of corn (up 185 million or 65%), a record 1,178 million bu of soybeans (up 493 million or 72%) with US wheat shipments at 505 million bu (up 7 million or 1%). The US is on pace to export more than 2,400 million bu which is 200 million bu above the WASDE forecast. ADM’s repairs on its Reserve Terminal, one of 3 that ADM owns in the Gulf, has been going favourably and that a reopening is possible before the end of the year. The reopening will add an additional 45-50 million bu of loadout capacity per month which will be a boost to the coming US corn export program. US Gulf elevations soared to record highs this autumn on massive demand by China for US soybeans. A record large US corn export program will be underway in January.
- The midday GFS weather forecast is little changed from the overnight forecast into December 24. A below normal rainfall trend is forecast for both N Brazil and Argentina. The midday GFS forecast is further south with Argentine rain (vs the overnight on the weekend) with the moisture outside of the primary crop belt. The next chance of showers is a weak frontal pass during the Christmas holiday weekend.
- High temperatures hold from the 70′s to the lower 90′s across Argentina while warming produces 90′s to lower 100′s in N Brazil, and 80′s to mid-90′s in E and S Brazil. The drier than normal forecast is threatening to S American crops following months of below normal rainfall.
- The wheat market is sagging as the rumoured Russian export duty will not be enough to shift world wheat demand to the US. But a final Government decree has not been decided on by Putin and a harsher outcome is a possibility. The S American weather pattern is deficient in rain for another 2-3 weeks which demands regular rains during late December and January. Soyoil futures are breaking out to the upside on the charts, while the early corn rally was capped by wheat. We remain bullish, this is no place to sell either corn or wheat.