- HEADLINES: Wheat soars to new highs on E Australian rain and concern about Canadian loadings; US weekly exports uninspiring.
- Chicago futures are higher at midday with wheat the upside price leader. Since the opening 30 minutes of morning trade, volume has really fallen off amid the pending holiday. We look for this to be a low volume week with traders not wanting to add to their risk profile. Adding to the uncertainty is that December options expire in a shortened trading session on Friday with first notice day against December being Friday. The market has a bullish tone at midday, but it feels that the range for the day is already in. Unless fresh news arrives on Tuesday or Wednesday, Chicago could just chop awaiting Australian, Central US and S American weather forecasts.
- Chicago brokers estimate that funds have bought 5,500 contracts of corn, 7,400 contracts of wheat, and 3,100 contracts of soybeans. In soy products, funds have bought 2,700 contracts of soyoil and 1,200 contracts of soymeal. Funds are adding to their net long position across Chicago. However, the managed money tends to be put to work early in the trading session, leaving values to then sag going home. It is then repeated during the next trading session. We continue to see/hear investment funds looking for more exposure to raw materials including energy. Research argues that energy has formed a trading bottom.
- USDA/FGIS estimated weekly US exports for the week ending November 18. The US shipped out 24.3 million bu of corn, 61.9 million bu of soybeans, and only 6.5 million bu of wheat. US corn/wheat weekly exports were well below trade expectations.
- For their respective crop years to date, the US has exported 299 million bu of corn (down 67 million or 18%), 667 million bu of soybeans (down 246 million or 27%), and 385 million bu of wheat (down 71 million or 15%). Hurricane Ida had a big impact on US grain exports during September/early October as operations were slow to come back online. December and January exports will offer final indications as to whether then US can make up for any of these lost sales.
- Russian fob wheat is trading at $351/mt fob today with interior CPT (carriage paid to) prices at 17,550 Rubles/mt. The Russian farmer has not shown any willingness to part with stored supply ahead of the coming winter. For each day that now passes, the Russian farmer will get into holiday mode, with sales likely on hold until after the end of the Orthodox Christmas holiday in late January. Russian farmers are concerned by their new crop prospects due to regional dryness. The world wheat market will have difficulty forging a top until the Russian farmer engages in sales. The calendar is starting to suggest that any volume of sales will hold off until early 2022.
- Russian troops continue to mass along the Ukraine border which is a geopolitical concern to the world grain markets. If Russian troops were to push into Ukraine in a show of force, grain markets would quickly rally. Europe and the US (NATO) would likely call for an immediate embargo of Russian trade (ag included), which would force importers/millers to seek wheat elsewhere. We see the odds as remote that Russia pushes troops into Ukraine, but heading into a holiday week, traders are loath to enter shorts.
- The midday GFS weather forecast is slightly wetter across Southern Argentina with near to above normal rainfall to persist across Northern and Central Brazil. The extra rain for S Argentina would be helpful as the 9-15 day forecast (week 2) shows below normal rain totals and warming temperatures. High temperatures will range from the 80’s to the lower 90’s.
- Seasonal Chicago trends are higher into Friday with cash markets firm on reported $2.40/bu soybean crush and $2.40/bu cash ethanol grind margins. The massive profits of the US biofuel and soy crush industries underpins Chicago on breaks. US energy futures are also scoring trading lows with WTI January crude bouncing off $75 support following a $9/barrel decline. The next stopping point for wheat is $9.00/bu as wet weather causes damage to the E Australian wheat crop. March corn has resistance above $5.90 and March soybeans above $13.00.