- HEADLINES: Grains firm on improved export sales; Soybeans shed premium amid disappointing NOPA crush.
- Chicago ag markets are mixed at midday, with grains steady to higher and soybeans down 8-10 cents as January again failed to breach chart-based resistance at $14.85-14.90. Technically, a close above this level is needed to accelerate buying while it is critical for the contract to maintain support at $14.65 to prevent speculative liquidation. Talk of rising Covid cases in Beijing and better rain chances in western and northern Argentina have provided weight, while long-term climate outlooks are beginning to account for La Niña’s demise and feature better odds that normal rainfall is established across all of S America in the Jan-Mar period. Beginning late Dec/early Jan, actual conditions will matter most. The core of Argentina’s ag belt faces an ongoing pattern of below normal precipitation in Dec. But the extraction of premium will be swift if regular rains are allowed to evolve in Argentina and S Brazil in January.
- Spot Paris milling wheat is down €3.50/mt and is trading below €300/mt for first time since Russia invaded Ukraine. Weakness in the European wheat futures market continues despite EU insurance/re-insurance aiming to exit the Black Sea market in January and despite firm interior premiums. Algeria managed to buy wheat for January arrival at an estimated $305-308/mt basis fob, which can only be filled with Black Sea supplies. Russian fob offers will likely stay weak to offset coming elevated logistics/insurance costs. Downtrends in EU/US wheat futures remain intact.
- US export sales through the week ending Dec 8 were better than expected across the board. Corn sales totalled 38 million bu, vs. 27 million the previous week and vs. an average needed to meet USDA’s forecast of 34 million. Soybean sales totalled 108 million bu, vs. 63 million the previous week and the largest since mid-November. China on a known basis secured a sizeable 46 million bu of US soy. Wheat sales were a three-week high 17 million bu, vs. 7 million the previous week.
- Soybean pace analysis continues to validate USDA’s forecast, for now, but total US corn commitments are still down 48% year on year. Weekly demand worth 35-40 million bu is needed each week between now and summer. It is troubling that China has yet to buy US sorghum in bulk.
- NOPA member soy crush in November was a disappointing 179.2 million bu, vs. 184.5 million in Oct and 179.5 million a year ago. Sep-Nov NOPA crush sits at 522 million bu, up just 1% year on year, and enlarged crush is mandated moving forward to meet the USDA’s projected annual total.
- NOPA soyoil stocks totalled 1.63 billion lbs, 10 million above expectations but down 202 million from Nov 2022. Implied Nov 1-30 soyoil disappearance was 1.98 billion lbs, down 130 million from the prior year.
- The midday GFS weather forecast is similar to the morning run in offering a pattern of soaking precipitation to Central and Northern Brazil, better rain chances across Western Argentina next week and lingering dryness across the remainder of Argentina, S Brazil and Paraguay. Cooler air will be allowed to slide northward into Central Argentine beyond Dec 23, but needed soaking rain remains absent nearby. Closer attention will be paid to long range guidance as equatorial Pacific Ocean temperatures warm. There is hope for an improved flow of moisture in Arg/S Brazil.
- It appears US wheat values have carved out intermediate lows, but sustained market strength hinges almost exclusively upon adverse S American weather. Rallies will be sold. Global raw material demand growth struggle without the return of solid Chinese economic performance.