• HEADLINES: NOPA adds two new crush plants raising November crush to a record 189 million bu and soyoil stocks to 1.2 billion pounds; GFS weather forecast slightly drier for N Brazil, hot into Dec 30.

• Chicago midday grain values are mixed with soybeans slightly lower, wheat higher and corn caught in between. The volume of trade has been slowed by the coming holidays with few wanting to add to their risk profile heading into the end of the year. Oil share spreading has pushed soyoil against its November low while soymeal struggles with the potential for additional Argentine meal offers.

• Ahead of an important weather weekend for Northern Brazilian crops, we anticipate a late day Chicago bounce. We calculate that funds are net long 18,000 contracts of soybeans and 112,000 contracts of soymeal, while being net short 26,000 contracts of soyoil as of Thursday’s settlement.

• USDA/FAS announced the sale of 447,500 mt of US soybeans to an unknown buyer and 134,000 mt of US soybeans to China. The US soybean sales pushed the 2-day total close to 1.0 million mt of US soybeans.

• Chicago brokers estimate that funds have sold 2,100 contracts of soybeans and 1,900 contracts of corn, while buying 2,300 contracts of wheat. In soy products, funds have bought 900 contracts of soymeal and sold 3,100 contracts of soyoil.

• The Biden Administration backed the US ethanol industry with an ability to claim tax credits under the GREET model which could amount to as much as $1.75/gallon. However, the DOE is updating the GREET model which has caused uncertainty as to actual future SAF demand. US ethanol/soyoil are fuels for SAF as the US airline industry looks to decarbonise. Sustainable aviation fuel will be an important new demand driver for US biofuels as the consumers increasingly turn to electric vehicles which has placed a 15 billion gallon cap on annual US ethanol production.

• The NOPA crush report reflected a record large November soybean crush rate of 189 million bu with member soyoil stocks rising to 1.214 billion pounds. However, the report included the crush/soyoil stocks from two new facilities in the Upper Midwest and Northern Plains that were not included in the October report. This skewed crush/soyoil stocks upwards. Also, it is unclear whether an E Midwest facility did not report their November crush/stocks data.

• The next new US crush soy crush facility (Platinum in Iowa) is not expected to come online until May or June of 2024. The NOPA November crush data points to another record large month of domestic soyoil offtake. As the US renewable diesel industry adds capacity in early 2024, a strain on US soyoil supplies/stocks is going to build into the summer.

• The midday GFS 6-day weather forecast is dry across Northern and Central Brazil with widespread 90’s/lower 100’s. However, the 7–11-day period offers rain of 1-2.50” for Mato Grosso, Goias, and Bahia. Confidence this far out is low based on the existing dry weather trend and lack of soil moisture, but the GFS forecast is consistent in breaking out rain starting on Dec 22. Our confidence in this rain is rising, but the exact details of the system have yet to be fully worked out. Traders will watch to see if the EU model follows with improving rain late next week. Argentina and S Brazilian rains are forecast to be near normal which favours crops.

• It feels like the holidays have started in Chicago with farmers in the US/Brazil and Argentina on hold with cash grain sales. Trade flow is coming from computer algo systems which are trading momentum. These traders sell or buy until the market pushes back. The Northern Brazilian rain is in immediate need and must continue regularly during January. Brazilian crops are declining, and yield drops would accelerate with widespread/meaningful rain. Patience is advised.

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