- HEADLINES: Soy sags on S American weather; Wheat bounces on Iraq demand; Risk willingness fades ahead of holidays.
- Chicago grain futures are mixed at midday with the soy complex in decline while the grains are trying to hold gains from late last week. Few are willing to place any new risk into the market which means that macroeconomic influences are having an oversized role in today’s price action. The US dollar is strong, stocks are struggling, and crude oil is down $2/barrel. Concern over future US and world raw material demand is hanging on like a bad cold.
- We look for a mixed Chicago close with soy complex under pressure while the grain markets chop. Few want to place on new risk amid headlines on the Ukraine export corridor that will be out in the next few weeks. Guessing what Putin and the Russians will allow has been impossible task in recent months, and few are willing to place any large bets on whether the corridor stays open or closes. The strength in the US wheat market today is based on Iraq making a larger than expected purchase of US HRW wheat in a weekend tender of 200,000 mt under US export financing. The volume of trade remains curtailed with resting orders lacking on either side of the marketplace.
- Chicago brokers report that funds have bought 3,000 contracts of corn and 3,200 contracts of wheat, while selling 3,000 contracts of soybeans. In the products, funds have sold 2,000 contracts of soyoil and 3,000 contracts of meal. Funds are standing down from adding much risk.
- US weekly export inspections for the week ending November 10 were 19.0 million bu of corn, 68.2 million bu of soybeans, and 2.8 million bu of wheat. The wheat exports were one of the smallest in years, while US corn exports post-harvest remain disappointing.
- For their respective crop years to date, the US has exported 194 million bu of corn (down 81 million or 29%), 539 million bu of soybeans (down 71 million or 12%) with US wheat exports at 364 million bu, down 15 million or 3%). The US export pace of corn/soybeans is not keeping pace with USDA annual projections. US wheat export estimates are already at multidecade lows.
- US President Biden and Chinese President Xi meet without much fanfare. The US renewed their pledge on a one China policy and stated that he did not expect that China would invade Taiwan nearby. Whether or not the meeting helped defuse tensions between the 2 nations has yet to be seen. However, we doubt that the meeting will boost US grain or soybean export demand nearby. Brazil will be the origin of choice for China’s soybean/corn purchases in 2023 due to their price competitiveness and advantage that they hold via freight. Estimated Nov 1 Brazilian corn stocks are forecast at a record large 31 million mt.
- The S American midday weather forecast maintains a wet forecast for most of Brazil for the next two weeks with rain of 1.50-4.50”. The moisture will be timely with high temperatures ranging from the 80’s to lower 90’s. The heaviest rain falls across the Northern Brazil with just 0.5-1.50” for RGDS in Southern Brazil. The Argentine forecast is dry with high temperatures in the 80’s and 90’s this week. The Canadian model has weekend rains. Some nice Argentine rain fell on the weekend, but regular rainfall is needed in the weeks ahead. We look for the Argentine area of drought to contract in December, but a few weeks of arid weather conditions are offered into Nov 25.
- December is the wettest month across Brazil and the recent rains have improved soil moisture for a favourable soy crop outlook. And the weekend Argentine rains have caused a speedup in planting. There remains headline risk of the Ukraine export corridor, but with traders cutting risk, few are willing to position on what Russia might or might not do. The latest GFS weather run has a blizzard for W Kansas in the 11–15-day period, but the confidence in accumulations is low.