• HEADLINES: Chicago mixed in low volume trade heading into the weekend; Black Sea and Brazilian fob offers leak lower; US energy values fall.

• Chicago corn, wheat and soybeans are mixed at midday with short covering noted in soybeans and soymeal. The wheat market continues its decline in fresh fund selling amid a feared slowing of world demand heading into the end of the year. The aftermath of the Ukraine corridor extension weighs on wheat with Russia said to be pushing their supply at traditional US HRW markets including Brazil and Mexico. Russian fob prices are holding around $315/mt, but they are trying to be more aggressive to shed exportable supply ahead of the winter. Don’t make a bid to Russia, unless you want to own wheat. The cash premium of US wheat has talk growing that a cargo or two of EU wheat may be working into the SE US. The message is that US fob wheat is expensive and Chicago/KC futures hold downside price risk amid more aggressive Black Sea exporters.

• Ukraine corn fob offers are also leaking lower in the wake of the extension with the premium said to be sliding to 30-35 over Chicago. Ukraine fob corn for December/January was offered at $0.35-$0.40 over yesterday, but in the hunt for new demand, the offers are in decline. Ukraine again will try to push out as much corn/wheat/sunoil as possible in the next 120 days. Ukraine needs the hard currency and farmers need to move new crop harvest ahead of winter. US Gulf corn for December/January is offered at $1.80 over or $1.50/bu more. Brazilian corn is offered at $1.00 over Chicago or $0.75 cheaper than the US Gulf. The non-competitive bids for US corn keep export demand thin. We cannot confirm any fresh Chinese interest for Brazilian corn following their purchase of 1.0 million mt early last week.

• Brazil has become more competitive in their soybean fob offers this week with February offered at $0.70 over and March at $0.60 over, some $0.90-1.00/bu cheaper than the US. World soybean demand will fully shift to S America starting in early December. No one is going to pay $0.90/Bu more to secure US Gulf soybeans in that timeframe. In fact, if the Brazilian basis keeps declining, it is possible that a Gulf crusher could look at importing Brazilian soybeans for their profitable crush margins.

• US spot crude oil prices continue to drop based on supply availability and the warmth witnessed across the EU in the weather forecast. The next downside target for spot crude futures is $75-77.00, which was nearly reached this morning. A purchase opportunity for spring diesel fuel is in the making with lows projected in the next few weeks. The weakness of crude oil is hurting renewable diesel and ethanol margins.

• Argentina is looking at a second soy/dollar swap to spur farm sales/greater flow of hard currency to the Government. A similar program in September produced the sale of 4.7 million mt of soybeans. Although Argentine farmers are preoccupied with spring seeding, a favourable December Peso rate vs. the US dollar could boost cash sales by 2.50-3 million mt. These soybeans would flow to exporters and crushers, which would compete directly against US offers. An announcement of the program may come as early as next week.

• The S American weather forecast is little changed and consistent with the overnight run, which raises our confidence. Showers are possible across Argentina this weekend with much of Brazil seeing the chance of daily showers next week. 10-day Brazilian rainfall totals range from 2.50-6.00”. The heaviest totals fall across NE Brazil. Argentina returns to a more arid weather pattern with the next chance of rain not showing until the 10–15-day period.

• Our market message is the same; Don’t chase rallies or breaks. A more sustained bearish price trend should evolve following the US Thanksgiving Day Holiday with favourable S American weather. December is the wettest month of the year for Brazil.

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