- HEADLINES: India secures 20,000 mt of US soyoil; Combined FAS export sales largest of the year; Lack of cash related selling above market.
- Chicago futures are higher at midday with corn, soybeans and wheat pushing upwards on new speculative buying and concerning S American weather. The sale of 20,000 mt of US soyoil to India was a surprise. The sale helped confirm that US soyoil had become too cheap relative to other oils. The US cannot afford to make large soyoil sales overseas with renewable diesel demand ramping up in Q1 2022. And the US wheat market is waking up to the fact that crop was lost in the windstorms from yesterday which locally exceeded 100 MPH. There were 55 locations in the Plains/Midwest that reported greater than hurricane force winds. Blowout (as agronomists call it) will drop Plain’s crop conditions in early January when select states release ratings. The need for rain is elevated as HRW wheat root systems are exposed. The midday tone in Chicago is bullish with us expecting a rally effort into the weekend.
- Chicago brokers estimate that funds have bought 3,600 contracts of wheat, 4,200 contracts of corn, and 6,600 contracts of soybeans. In the products, funds have bought 4,700 contracts of soyoil and are flat in soymeal.
- The FAS weekly export sales report showed that the US sold 23.9 million bu of wheat, 76.7 million bu of corn, and 48.1 million bu of soybeans. Also noteworthy in that US sorghum sales were 13.1 million bu. All combined, the US sold an impressive 161.8 million bu of all grain and soybeans, the largest looking backwards for a year. Biweekly price drops produced new demand.
- For their respective crop years to date, the US has sold 1,516 million bu of corn (down 123 million or 7.5% and the second largest US corn sales total as of early December. The US has also sold 559 million bu of wheat (down 163 million or 22%), and 1,474 million bu of soybeans (down 498 million or 25%). The US soybean sales pace has been picking up against last year. The WASDE 2021/22 export total is still high, but it is becoming likely that the difference won’t be more than 100 million bu or 1,950 million bu. This helps solidify that US 2021/22 soybean end stocks will not surpass 400 million bu.
- The USDA announced the sale of 20,000 mt of US soyoil to India. The sale was unexpected, and it will add to the US export pace which is too large relative to the build-up of domestic renewable diesel demand. India has now secured 80,000 mt of US soyoil and shipped out 30,000 mt. Commercial traders have raised their Indian purchases of US soyoil to 100,000 MTs in 2021/22.
- Someone in China issued a “green light” for their feed industry to secure US sorghum in November. This week’s US sorghum sales were a marketing year high at 13.1 million bu. And cash sources indicate that China is still buying.
- China is expected to rapidly draw down US sorghum stocks which will boost US corn feeding as its price premium to corn grows. Like 2020/21, China is back on a mission to import larger amounts of feedgrains. US sorghum does not need a GMO certificate to be imported into China.
- The midday GFS weather model is consistent with the overnight run. Limited rain is offered for the crop areas of S Brazil and Argentina over the next 10 days. A ridge of high pressure produces heat/dryness with high temperatures ranging from the mid 80’s to the lower 100’s. Northern Brazil stays well-watered with rainfall 3.50-8.00”. Unfortunately, S American crop yield risks are rising with excessive rains in N Brazil and a deepening drought for S Brazil/N Argentina. The overall S American weather pattern is stable.
- Chicago futures rose easily with limited selling noted above the market. End users and importers are willing to support breaks, it is the selling above that is limited with US/S American farmers not wanting to add to their sales. Adding weather premium is the new mantra with S American crop estimates in retreat. Funds are now short of wheat and have substantially reduced their long in soyoil. Our view stays bullish.