- HEADLINES: NOPA crush exceeds expectations; Funds add to Chicago wheat length.
- Chicago ag futures have again traded both sides of unchanged in weak volume, with soybeans, meal and Chicago wheat the bullish leaders at midday. The pace of physical US soybean exports remains impressive while funds continue to build net length in the US wheat market. CFTC data will be released this afternoon following last week’s Veteran’s Day holiday in the US. We estimate that managed funds last Tuesday were net short a modest 2,000 contracts of Chicago wheat, but since last Tuesday fund have bought some 35-37,000 contracts.
- Algeria has postponed a wheat purchase planned for today to Tuesday. Paris milling wheat futures have reacted negatively to the allowing of minor bug damage, which favours Russian exporters, while Algeria has also boosted its minimum test weight requirement to 77kg, which bodes poorly for French exports following this season’s quality loss there. Wheat prices worldwide are not slowing importer demand, but the EU missing out on this week’s Algerian business is viewed as negative to wheat consumption there in the near-term. Aussie wheat futures are also down slightly amid coming dryness there.
- FAS’s daily reporting system featured 264,000 mt of soybeans sold to unknown destinations and 198,200 mt of US corn sold to Mexico. 50,000 mt of Mexico’s purchase this morning is for 2022/23 delivery. Other tender/demand news is absent, and overall, it has been a rather uneventful/quiet start to the week.
- US weekly export inspections through the week ending Nov 11 featured 76 million bu of soybeans, with the previous week’s total revised upward 9.7 million bu to 106.9 million, the largest weekly FGIS number since Nov 2016. Corn shipments totalled 34 million bu, vs. 26 million the prior week. US wheat shipments totalled 14 million bu, vs. 9 million the previous week. For their respective crop years to date, US exporters have shipped 1,223 million bu of soybeans, 33% below last year 1,263 million bu of corn, down 6%, and 488 million bu wheat, down 22%. Pace analysis argues against any significant changes to US exports in the USDA’s Dec WASDE, but weekly soy sales/shipments must stay elevated to avoid a downward revision thereafter.
- NOPA-member soybean crush in October totalled 184 million bu vs. trade expectations of 182 million. Crush in October was down 1.3 million bu from last year but is the second highest for the month on record. The recent short-covering rally in soymeal has lifted the spot futures-based crush margin to an incredible $2.10/bu, vs. $1.15 a year ago in mid-Nov. Actual margins in the cash market are even better amid positive meal and oil basis. Monthly crush is expected to stay above 180 million bu well into mid/late spring. Oct 21 soyoil stocks were 1.83 billion lbs, vs. 1.49 billion a year ago, which leans bearish Chicago oil.
- US soyoil disappearance has been intact at high prices, but until the US’s renewable diesel program ramps up in mid/late 2022, boosts in crush rate will keep the US soyoil market adequately supplied.
- The midday S American weather forecast is wetter in southern Brazil in the 11-15 day period, with needed accumulation of 1-3” offered to Parana and RGDS. Confidence so far out is low, but whether rain expands into the drier areas of southern Brazil by late November will be monitored closely. The forecast is otherwise consistent with the overnight run. Daily showers persist across Central and Northern Brazil. Dry/mild conditions will be established throughout the next 10 days across Buenos Aires and Cordoba Argentina, which will allow soy seeding there to accelerate.
- Chicago markets have digested record low exporter wheat stocks/use and the tightening of US corn supply and demand relative to expectations early Nov. A choppier marketplace is anticipated into the holiday season, with acute focus to be paid to S American weather beginning in early Dec. Jan Chicago soybeans are viewed as overvalued above $12.75.