- US/China trade talk worry was reported by CNBC around 7:00 am CST that turned the headline readers into “sellers” after the 8:30 opening. The news was that Beijing had turned pessimistic on a Phase One Trade deal due to US President Trump’s reluctance to roll back Chinese tariffs.
- China claims that such tariff rollbacks were promised in the mid October Washington DC meeting. The bearish headlines pressured Chicago corn, soybeans and wheat with volume active in the first 15 minutes of the trading day.
- Funds were active sellers of corn/soybeans with the wheat market gaining on the finding of new world demand. We look for a mixed Chicago close with the volume of trade declining at midday. Traders have heard trade rumours many times in the past 18 months and are becoming desensitised to the day to day news flow. It is late to become bearish of December corn below $3.65 or January soybeans below $9.00. Wheat is bouncing on several fresh N African tenders.
- Chicago traders estimate that funds have sold; 6,600 contracts of corn, 5,200 contracts of soybeans, and 2,800 contracts of soymeal. In wheat, funds have bought 3,600 contracts in Chicago while also securing 2,300 contracts of soyoil. The oil/meal spread continues to push to new rally highs as China’s vegoil and pork fat availability is compromised due to ASF.
- US exports for the week ending November 14 were 25.0 million bu of corn, 56.3 million bu of soybeans, and 16.5 million bu of wheat. The soybean export total was slightly larger than expected with 33.7 million bu being shipped out to China. The Chinese imports accounted for 61% of all US soybean weekly exports.
- US cumulative exports for their respective crop years to date are; 196.0 million bu of corn (down 275 million or 42%), 456 million bu of soybeans (up 49 million or 12%) with wheat at 438 million bu (up 77 million or 21%).The US wheat and corn export pace is sliding, but wheat is far enough ahead of last year for WASDE to hold onto their current annual export forecast. US 2019/20 US corn exports will likely be cut another 25-75 million bu in the December WASDE.
- Chinese importers report deepening delays with the offloading of soybean cargoes at port. Chinese importers secured the soybeans expecting that the US and China would have just signed the APEC Phase One trade deal, offering bullishness to the Chinese soy outlook. However, the APEC meeting was cancelled and more than 2.7 million mt of soybeans are now said to be delayed at port. We have concern that Chinese soybean port off loading delays will persist into yearend.
- The midday GFS weather forecast is slightly drier from the overnight run for S Brazil and S Argentina. No rain shortages are foreseen for North Central Brazil, it is the south where dryness could be a regional issue. The good news is that any real heat is absent or confined to just a few days. For the vast majority of the S American corn/soy crops, soil moisture is favourable. Although there are a few dry pockets, soy production occurs across nearly 1,200 miles and there are always a few areas in need of rain. So far, the 2019/20 S American weather profile looks favourable into December and trend yields are expected.
- US wheat values are rising on new tender demand from Algeria/Tunisia amid the prospect for a decline in US ratings amid last week’s Central US arctic cold. Chicago corn/soy values are sinking amid tepid US export demand against the worry about slowing Chinese demand (Phase One Trade Deal does not get completed). Chicago remains sensitive to US/China trade headlines. Midwest cash basis has been strong for months and continues to gain. December Chicago options go off the board on Friday.