- Chicago futures are higher at midday with the market backing off a portion of their overnight gains. January soybean futures have been unable to rise above $12.00 for the third time in the past 10 days. Corn/wheat have followed soybeans to the upside in moderate volume. The Brazilian drought continues to gain the attention of the trade amid deepening crop losses. A 128-129 million mt Brazilian 2020 soy crop is gaining considerable attention as to how it would impact a US soybean balance sheet that cannot stand any additional demand. Longer term, the importance is how it impacts the 2021 winter corn crop with reports that Brazilian growers already reducing their corn seeding intentions.
- Chicago brokers estimate that funds have bought 7,400 contracts of corn, 6,600 contracts of soybeans, and 3,200 contracts of wheat. In soy products, funds have bought 4,100 contracts of soyoil and 3,400 contracts of meal. Funds have been on the buy side of the Chicago since the opening with an early morning dip related to profit taking ahead of the US Thanksgiving Day holiday. Chicago futures will trade normally through Wednesday with the markets closed Thursday (Thanksgiving) with Friday’s market closing early at 12:05 CT.
- FAS reported the sale of 334,000 mt of US corn to an unknown destination. The buyers are said to be South Korea and China. The US is the only sizeable seller of corn into April, when Argentine new crop supplies are available.
- US export inspections for the week ending November 19 were; 32.8 million bu of corn, 13.1 million bu of wheat, and 73.8 million bu of soybeans. Last week’s US soybean inspections were adjusted upwards by 8 million to 90.6 million bu.
- For their respective crop years to date, the US has exported 455.5 million bu of wheat (up 2 million or 1%), 364.2 million bu of corn (up 143 million or 65%), and 897 million bu of soybeans (up 368 million or 70%). China continues to be the shipper of size for US corn/soybeans.
- China last week sold just over 700,000 mt of Government reserve wheat in its domestic cash market. So far, the reserve wheat auctions have not had much if any impact on feedgrain prices. Chinese corn cash markets continue to climb as their harvest is just completed with Dalian futures at new highs. The strong feed demand from the rebuilding Chinese hog industry is impressive.
- The US$ index tested key support at 92.00 on expanding Covid-19 vaccine opportunities and a “risk-on” investing mentality. The US$ was able to bounce from the 92.00 support which produced some early pressure on Chicago values. However, it is unlikely that the US$ will be able to enter a lasting bullish trend amid rising US debt and investment flow into SE Asia.
- The midday GFS weather model solution is like the overnight forecast with limited rain for Mato Grosso, Goias, Mato Grosso Do Sul and Parana over the next 10 days. There are hints of better rain in the 11-15 day period, but that is too far out for confidence with many times the model just correcting for normal seasonal trends. Rain is forecast for far S Brazil (RGDS) and Argentina starting midweek and persisting for the next 9 days. In fact, with the jet stream stagnant, some areas of N Argentina will see heavy rains of 5-8.00″ which will produce low lying flooding. The dryness for Northern and Central Brazil is historic and crop losses will become acute without above normal rains in December.
- Drought concern is building across N and C Brazil with another two weeks of drier than normal weather offered. Mato Grosso rain from Sept 1 through Nov 30 is at a 40-year low. Amid a world soybean stock/use ratio that is at a 23-year low, the loss of any S American soybean crop will have an exaggerated bullish impact. We doubt that $12 can constrain the soy rally much longer. And tightening world feedgrain supplies is having it own bullish impact. A push to new contract highs is expected in the soybean complex and corn with the wheat market in tow.