- HEADLINES: Investment flows boost Chicago to sharp morning gains; US farmers boost cash sales; Egypt’s GASC buys just 60,000 Romanian wheat.
- Grain markets are sharply higher at midday with the soy complex being the upside leader. Managed money inflows on inflation positioning and reports of concerning weather forecasts for S America has the complex pushing to sharp daily gains. March soybean futures were able to push back above $13.00, the highest price since the bearish September 30 NASS Stocks report. Corn and wheat have followed with both attempting to test last week’s high. March corn scored a short term high at $5.93 while March KC wheat topped out at $8.44 last week. The volume of trade has been active with moderate producer cash selling noted on the sharp advance. The daily highs are likely in place, but aggressive selling will depend on speculative profit taking going home.
- Chicago brokers estimate that funds have bought 12,900 contracts of corn, 16,700 contracts of soybeans, and 6,900 contracts of wheat. In soy products, funds have bought 3,500 contracts of soyoil and 2,400 contracts of soymeal. The fund buying of soymeal has not been very large on the morning rally. This was less than expected volume with December soymeal almost filling an upside chart gap, which has produced some profit taking. The morning spike rally in meal likely forged a top in March soybean futures above $13.00.
- FAS reported the sale of 30,000 mt of soyoil to India and 132,000 mt of US soybeans to China in the 2021/22 crop year. A year ago, India made a purchase of 80,000 mt of US soyoil at about the same time due to the US competitive soyoil price position relative to palmoil. The US soyoil sales pace has been slow due to elevated cash Gulf offers, but with world sun/canola oil prices rallying sharply, US soyoil is again competitive. The FAS/USDA will be releasing their weekly export sales report on Thursday.
- EIA reported that the US weekly ethanol grind to produce ethanol rose to 312 million bu, up 7 million from the week prior. The US needs to average 296 million bu of corn grind per week to reach the WASDE annual usage forecast at 5,250 million bu. Research maintains a US 2021/22 US corn grind of 5,400 million bu or 150 million more (than WASDE). The weekly pace in the crop year to date is on target to reach our elevated US corn grind.
- Weekly US ethanol stocks fell by 9 million gallons to 843 million due to strong blender demand. US gasoline stocks are at their lowest levels on years amid active consumer demand and elevated miles driven.
- Egypt’s GASC secured 60,000 mt of Romanian wheat in the overnight tender. Turkey is tendering for 385,000 mt of wheat, which will likely be mostly Russian as exporters have been moving this wheat into position to lock down the Russian floating export tax. A sizeable Turkish purchase is expected. We expect that Russia sold nearly all the 800,000 mt of Algerian wheat purchased in a tender that closed on Tuesday. Reports that Russia sold just 250,000 mt are too low we believe.
- The midday GFS weather forecast is like the overnight run with limited rainfall for Argentina and the far southern areas of Brazil over the next 10 days. Moderate to heavy rains will persist across N Brazil with totals of 3-6.00” into Nov 27. A break in the wet Northern Brazilian weather is desired with sunshine for soy crop reproduction.
- New investment flows into Chicago has produced a one-way bullish price move this morning. However, the low volume rally in soymeal with values nearly filling an open chart gap suggests that a correction could befall the market heading into the weekend. It is premature to be overly bullish on S American weather for another few weeks.