- Chicago summer row crop futures have recovered from the overnight (mutated) virus jitters with dryness across Argentina and S Brazil in focus. Soybean and meal futures have scored new contract highs while soyoil sags in relation to the $2/barrel fall in crude oil futures. The corn market crawled back to unchanged with wheat in tow. The volume of Chicago trade has been hefty with end users and funds using the overnight break to add to their growing length. We look for a mixed Monday close with the soy complex outperforming the grains.
- We have been asked if there was any news at this ,morning to spur a quick 21 cent rally in soybeans. We cannot find any fresh fundamental news, but we hear that someone bought 7,000 contracts of soybean futures in a 4-minute window to push values sharply higher. There are few resting sell orders above the market as the US and Brazilian farmer have oversold his crop comfort level. The lack of farmer cash selling exacerbates Chicago rallies and reflects bullish price trends. The risk in a S American weather market is to the upside, not the downside, until the 2021 crop is made in February/March.
- FAS/USDA did not announce any new daily sales of corn, wheat, soybeans, or soy products today. US exporters report of the daily interest in the switching soy product and corn cargoes to the US Gulf that are caught up in the Argentine crush/port strike. Exporters are looking for prompt US Gulf soymeal. But as the strike goes on through the holidays, soyoil and corn will also be booked. The Argentine strike is now 12 days old and there are no talks planned into the Christmas Holiday. Argentine sources are fearing that the strike could persist into early 2021.
- US weekly export inspections for the week ending December 17 were massive for soybeans at 93.1 million bu with last week’s sales revised upwards to 90.3 million bu. China shipped out 44 million bu from all US ports. We estimate that on a known and unknown basis, China has bought 35 million mt of US soybeans. China is clearly on their way to securing 38-40 million mt of 2020/21 US soybeans, a record. The US has shipped out 1,275 million bu of soybeans through December 17 with total Census exports forecast to be 60-80 million bu larger.
- US weekly corn inspections were 30.0 million bu with wheat at 14.4 million bu. Crop year corn inspections are 501 million bu (up 200 million) with wheat equal to last year’s pace at 520 million bu.
- Chicago brokers estimate that since the Chicago reopen, funds have bought 9,000 contracts of soybeans, 5,500 contracts of corn and 3,200 contracts of wheat. Funds have bought 3,100 soymeal and 1,400 contracts of soyoil.
- The midday GFS weather forecast is little changed from the overnight run with a general drying trend forecast for Argentina and Southern Brazil for the next 10-12 days. If any meaningful showers develop, they will be located over W Argentina, close to the Andes Mountain range.
- The extended forecast maintains a classic La Niña pattern for S America with dry Argentine and Southern Brazilian weather while daily showers fall across N Brazil. The showers will stabilise the crop but will not repair yield losses that were suffered amid the historical dryness from September 15 into December 20 across N Brazil. A one-two punch of N Brazilian and Argentine losses could be magnified with the passage of time. The overall S American weather pattern is threatening with Argentine temperatures to warm into the mid 90′s over the Christmas weekend.
- The soy complex must endure a dramatic demand rationing phase with US soybean exports/crush record large. A rally to $13.50-14.00 March is justified with normal S American weather. The loss of any S American soybean (or corn) crop only exacerbates the bull market. January soybean options expire on Thursday with FAS’s weekly Export Sales report due Wednesday. Funds will likely return to their buying ways right after Christmas with the January WASDE report in the market’s sight on 12 January.