- Chicago futures are mixed at midday with soybeans/soyoil recovering on US cash strength while corn/wheat hold in the red on ongoing fund long liquidation. The volume in Chicago has slowed at midday with Brazilian fob soybean basis bids stabilising while traders discuss positioning into a weekend of S American weather becoming more important to yield. S American weather drives price.
- 24-hour Mato Grosso rainfall was widely scattered and short of levels that would change deteriorating crop conditions. December Chicago options expire Friday which is adding to the day’s price pressure. We doubt that any corn/soy price decline can be sustained until large 2021 S American crop sizes are confirmed. However, the rally in US interior cash basis bids has farmers selling corn with the Dec/July corn spread priced at an 8 cent July premium. Narrowing spreads encourages US farm selling and attempts to start a demand rationing effort. To date, there is no statistical evidence of demand rationing in either US corn, soybeans or soy product prices.
- Chicago brokers estimate that funds have sold; 2,600 contracts of soybeans, 4,300 contracts of soymeal, 4,800 contracts of corn, and 4,600 contracts of wheat. The only commodity that funds are buyers is soyoil where they have purchased a net 2,900 contracts this morning.
- No new US sales were announced in the daily reporting system. FAS in their weekly sales report showed that 7.1 million bu of wheat, 42.9 million bu of corn, and 51.0 million bu of soybeans were sold in the week ending November 12. The US also sold 45,100 mt of US soyoil and 182,100 mt of US soymeal. The US soyoil sales was far better than expected. US corn and soybean sales of mid-October are record large.
- For their respective crop years to date, the US has sold 634 million bu of wheat (up 60 million or 10.4% from last year), 1,388 million bu of corn (up 866 million or 165% from last year) with US soybean sales at 1,884 million bu (up 1,017 million or 117% from last year). China added 4.44 million bu of corn and just over 40 million bu of US soybean purchases last week. Although China is not showing up in daily reporting, sheets, it has booked a known 28.6 million mt of US soybeans and likely another 6.0 million in the unknown category for a combined total of 34.5 million mt. China appears to be on its way to taking as much as 38-40 million mt in the 2020/21 crop year which will raise US soybean exports above 2,375 million bu. Such export demand cuts US 2020/21 soybean end stocks to under the pipeline of 100 million bu creating a sizeable rationing need with normal S American weather. The US has now sold 86% of its annual export forecast by mid-November.
- The midday GFS weather model is like the overnight run with the only change being a slightly warmer/wetter profile for Argentina and S Brazil next week. N and Central Brazil stays largely dry with any rain focused on NE Brazil, Sao Paulo and Minas Gerias. The drying trend across Northern Brazil is worrisome for crops with limited soil moisture noted heading into December. And the southern two thirds of Argentina and S Brazil holds in a below normal rainfall trend with rising temperatures during the 6-12 day period. The outlook for S American crops is threatening.
- We believe US 2020/21 soybean export estimates are understated by WASDE with 86% of the 2,200 million bu 2020/21 annual forecast being already sold in mid-November’ WASDE needs to raise its soy export and crush forecasts based on demand by sizeable amounts. US corn futures await improved Chinese corn buying or a worsening of S American weather. Soyoil stays the most bullish Chicago commodity as Argentina has sold out and world vegoil demand shifts to the US Gulf. It is December Brazilian weather which keys Chicago prices after the US Thanksgiving Day.