- HEADLINES: Corn, soy export sales better than expected; $4.00 break in crude keeps Chicago weak.
- Chicago corn, wheat and soybeans are little changed from the overnight session, with macro markets weighing heavily on price discovery and as US grain markets reel from this morning’s confirmation that competition for corn and wheat market share stays steep into early spring. Ukrainian corn exports are likely to be revised upward by 3-5 million mt as USDA accounts for the free passage of Ukrainian grain through the Black Sea through winter. Ultimately, Ukrainian corn exports may be raised further, but the pace of monthly shipments during winter must be measured first. And relatively warm weather projected across southern Russia into early Dec limit logistical issues there. Sizeable Black Sea grain exports will continue.
- Paris milling wheat has reversed early losses and is trading modestly higher in both €uro and US dollars at midday. Dec Paris milling wheat today sits at a €4.50/mt premium to March, and cash market strength in Europe underscores the tightness of grain balance sheets.
- But Chicago markets, perhaps more than the corridor’s extension, are subject to collapsing crude oil (down $3.90/barrel at midday), a sharply higher dollar and associated weakness in S American currencies. Weakness in the Brazilian Real today is nearly offsetting Chicago soy’s decline. Soy acres will be maximised and profitability there is likely to be sustained well into the 2023/24 crop year. Market uncertainty over new President Lula’s spending plans is noted. Macroeconomic headwinds persist.
- US corn and soybean export sales in the week ending Nov 10 were far better than expected. US corn sales through the period totalled 46 million bu, vs. 10 million the previous week and the largest since March. Mexico secured 36 million bu, and US corn sales through the week ending Nov 17 are projected at 55-60 million following this week’s Mexican purchase. This does not reflect an outright change in the structure of corn trade flows, but any/all demand is welcomed. Soybean export sales were 111 million bu, vs. 29 million the previous week. Cumulative soy commitments of 1,322 million bu are up 4% year on year. Wheat sales totalled 11 million bu, vs. 12 million the previous week and right at the pace needed to meet the USDA’s annual target.
- NOAA’s updated Dec-Feb climate outlook features ongoing warmth and dryness across the Southern Plains as La Niña’s impact lingers, but an easing/elimination of drought is projected across the PNW, eastern Midwest and mid-South.
- The S American GFS weather forecast is wetter in Central Brazil in the 11–15-day period but is otherwise consistent with the morning run. Scattered showers will impact portions of Argentina’s southern and western crop areas Sun-Mon, but net soil moisture loss will be ongoing across a vast majority of Argentina into early December. Rainfall across tropical latitudes of Brazil increases in intensity beyond the weekend. This includes key producing states Mato Grosso and Goias. Lesser rain will be recorded across the southern third of Brazil. Soil moisture trends in Argentina/S Brazil need monitoring as weather begins to impact S American yield potential more directly in December.
- Sustained rallies require S American weather adversity. Risks are present in Argentina and S Brazil but building drought will be highly difficult across the heart of Brazil’s soy belt during the winter months.