- HEADLINES: Dell the rumour and buy the fact trading on Ukraine grain corridor; NOPA soyoil stocks rise/crush as expected.
- Mixed trends are the theme of Chicago values as Chicago wheat paces the decline while soybean futures rally on sell the rumour and buy the fact trading. Russia and the UN are indicating that considerable progress has been made on keeping the corridor open, which sparked the early headline selling.
- However, the grain industry has been expecting that the corridor would stay open, and Ukraine can export 3 million mt of grain/month through the far west into Europe if it closes. The continuance of grain flow through the corridor is important, just not as “earth moving” as was back during the summer. We look for a mixed to slightly higher Chicago close on firm cash corn/soybean basis bids and the fast-approaching first notice day against December futures.
- It is a holiday in Brazil and limited hedge selling is occurring in soy/corn. Brazilian farmers are enjoying their summer holiday and are not engaged. We look for the Brazilian farmer to be a much better sellers of soybeans and first crop corn in late November/early December. Chicago is lacking one of the world’s biggest shorts today, the Brazilian farmer.
- Brokers report that funds have bought 2,000 contracts of corn and 2,200 contracts of soybeans, while selling 3,800 contracts of Chicago wheat. In the products, funds have bought 2,000 contracts of soyoil and are flat in soymeal.
- Chicago open interest fell sharply yesterday as traders start cleaning up positions ahead of first notice day against December futures on the 30th. Corn open interest was down 32,683 contracts, soybeans were off 1,450 contracts and wheat was down 6,256 contracts on Monday. The massive spreading of Dec/March corn was liquidation. December corn has a hefty 373,000 contracts still open. Seasonal price trends are sideways to higher heading into the US Thanksgiving Day holiday as US farmers are not engaging as cash sellers. December position squaring and strong cash markets affords the chance for a Chicago bounce.
- The NOPA October Crush report showed a crush of 184.4 million bu, which was right at industry expectations and up 1 million from last year. NOPA soyoil stocks grew to 1.528 billion pounds, up 69 million pounds reflecting that renewable diesel demand is not (yet) draining US stockpiles. We lament that the loss of US soyoil export demand is far greater than any gain from renewable diesel. Funds were active buyers of Chicago soyoil futures using it as a proxy for diesel fuel. The Chicago soyoil rally was largely speculative with open interest in the past month rising 16%. The CoT report shows that money managers hold a long soyoil position more than 100,000 contracts. We believe the NOPA Crush report as being neutral to slightly bearish. Soyoil futures will struggle to sustain the current bull market through December.
- The S American midday weather forecast maintains a wet forecast for Brazil for the next 2 weeks with rain accumulations of 1.00-4.50”. The moisture will be timely with high temperatures ranging from the 80’s to lower 90’s. The GFS forecast is starting to see the moisture like the EU and Canadian models for Argentina this weekend. The forecast leans favourable for Brazil with more rain needed for Argentina following the good weekend soaking.
- The US GFS weather forecast has added heavy snow for Kansas and the W Plains on the Thanksgiving week holiday. Confirmation is needed, but this could be the start of a wetter weather pattern for the Plains.
- Choppiness lies ahead into the US Thanksgiving Day Holiday with S American farmers expected to become better sellers of their new crop in December. There is little doubt that US inflationary pressures are waning, but this will not stop the US Central Bank from raising the fed funds rate another 0.5% in December and 0.25% in January before they pause. A deepening recession is ahead with US export demand to slow. Adverse American weather is needed to sustain a rally.