- HEADLINES: NOPA member soyoil stocks fall to 9 year low at 1,100 million pounds, demand bull market unfolding; Northern Brazilian dryness looks to continue; Corn lower on open Midwest harvest weather.
- Chicago grain markets are mixed at midday with corn weaker while soybeans and wheat futures are higher. Soyoil has pushed to heady gains based on NOPA member soyoil stocks falling to their lowest levels in 9 years at 1.1 billion pounds due to record large domestic soyoil demand. Chicago has a firm undertone to price, but an acceleration of the US corn harvest (open weather) and abundance of world feed wheat is capping rallies.
- Soybeans will follow S American weather more closely with Northern Brazilian soy seeding and replanting to become more important in coming weeks. Acute dryness is starting to worry the North Central Brazilian farmer. Chicago will uncover support on breaks with rising Midwest cash basis levels for corn, soybeans and wheat providing a bullish undertow. Seasonally, a post-harvest recovery should unfold into the middle of November.
- The USDA announced the sale of 200,000 mt of US corn to Mexico and 183,000 mt of soymeal/soymeal cake to the Philippines. There is also talk that China booked 3-5 cargoes of US soybeans off the PNW for November. China continues to take record tonnages of Brazilian corn with exports in October estimated at 4.5-4.7 million mt based on vessel nominations.
- Chicago brokers estimate that fund managers have purchased 2,300 contracts of wheat, 3,200 contracts of soybeans, while selling 5,400 contracts of corn and 1,100 contracts of soymeal.
- The US exported 17.1 million bu of wheat, 73.9 million bu of soybeans, and 13.0 million bu of wheat for the week ending October 12. We would note that there were large export revisions for the week ending October 5 with US corn exports at 31.7 (up 10 million bu), soybeans at 51.5 million bu (up 13 million), and wheat at 11.2 million bu (up 1.5 million). For their respective crop years to date, US wheat exports stand at 233.6 million bu (down 102 million or 30%), US corn exports are 154 million bu (up 25 million or 19%), with US soybean exports at 198.6 million bu (up 25.1 million or 14%). US corn and soybean loadings are holding up much better than sales.
- NOPA reported that a record 165.5 million bu of US soybeans were processed in September, up 4.1 million bu from August, and up 7.4 million bu from last year. The crush produced a record amount of soyoil, but US NOPA member soyoil stocks fell to their lowest level in 9 years at 1.108 million pounds, down 12% from August and down 24% from last year. The US continues to use more oil for biofuel than food consumption, and WASDE will be forced to make future adjustments in demand. And as US biofuel demand takes up an increasing amount of US soyoil production, food users will want to make sure that their name is on a processor’s future production just to make sure they have the supply. A demand rationing rally is required with the latest decline in soyoil values only helping the US renewable industry to lock down margins well into 2024.
- The midday GFS weather forecast maintains an arid rainfall trend across North Central Brazil into October 26 with rain totals of 0.25-1.50” (30% of normal). Southern Brazil will endure additional heavy rain with totals of 2.50-6.50”. The S Brazilian rain adds to the flooding potential with corn yellowing becoming more pronounced. The extended 11–15-day period does offer improved Northern Brazilian rainfall, but this is a low confidence forecast. The extended range forecast has not been useful.
- Record or near record heat will also prevail across Northern Brazil this week with highs temperatures ranging from the mid 90’s to the lower 100’s. The heat/dryness has placed a halt on new N Brazilian spring planting.
- The Northern Brazilian weather forecast is worrisome with heat/dryness to linger into November. Midwest cash basis bids have rallied strongly in the past 10 days as US farmers are tight fisted with newly harvested supply amid spot export demand. The most bullish Chicago commodity is soyoil due to record and expanding renewable diesel demand. Corn/soy breaks will be well supported, but a strong rally hinges on worsening Brazilian weather or Chinese demand for US SRW wheat. Seasonally, Chicago values tend to rally into mid-November.