- HEADLINES: Sharp fall in US crude oil prices offers bearish headwinds; US ethanol grind nears seasonal peak; Argentina to offer up soybean dollar program.
- Chicago values are mixed in pre-holiday choppy trade. The sharp fall in crude oil futures is providing bearish headwinds for the bulls. The volume of trade is poor due to traders closing out positions ahead of tomorrow’s US Thanksgiving Day Holiday. Chicago will have a hard opening on Friday and then trade until 12:05pm. December option expiration will be featured which could boost market volatility heading into the weekend.
- US crude oil futures have fallen to sharp losses as G7 members discuss a price cap that will be above where the price of Russian crude is currently trading. The price being discussed is $65-70/barrel on Russian seaborne crude, which could boost Russian exports. Russia is exporting similar amounts of crude today to when the war started back in late February.
- US natural gas prices are soaring on the news that a potential restart of the Freeport Texas LNG export facility in mid-December and colder Central US weather forecasts. The lack of excessive gas supplies is elevating US natural gas volatility, unlike prior years, natural gas futures are showing huge day to day market volatility related to US temperature forecasts and demand.
- Chicago brokers estimate that funds have bought 1,900 contracts of corn, while selling 3,100 contracts of wheat and 1,900 contracts of soybeans. In the products, funds have sold bought 2,800 contracts of soyoil and bought 1,200 contracts of soymeal.
- The USDA confirmed that 110,000 mt of US soybeans was sold to China. The sale was the first of the week to date. China is shifting its demand to cheaper Brazilian soybeans. February FOB Brazilian soybeans are being offered $0.85/bu cheaper than the US Gulf.
- Rumours abound that the Argentine Government offering up its soybean dollar (Green Peso) program for cash soybean sales before the end of the week. The Peso rate vs. the USD has not yet been set but could be as much as 10% above the current levels to spur farm sales. The Argentine Government financially prodded farmers to sell nearly 5.0 million mt of soybeans back in September. That was before planting when farmers needed cash (Pesos) for inputs. This time around will likely be less successful with sale estimates ranging from 1.5-3.0 million mt. The sales will boost Argentine crush and soybean exports over the next 45 days.
- Paris wheat futures have dropped on slowing demand/liquidation as December futures open interest declined. And Ukraine continues to export wheat/corn, even as Russia tries to damage its electrical infrastructure heading into the depths of winter. World wheat end users are using the break to extend their forward coverage into 2023. Russia stays aggressive in offering its wheat at $315-318 basis fob. Amid a record crop, Russia will stay an aggressive seller.
- The S American weather forecast is little changed and consistent. Northern and Central Brazil has a daily chance of rain for the next 10 days. Southern Brazil and Argentina are dry for the next 6-7 days before showers return. Initial rainfall totals look to range from 0.25-1.00” with improved totals in the 11–15-day period. La Niña is weakening which should boost Argentine rain chances from mid-December onward.
- Sliding crude oil futures and rumours of soybean dollar in Argentina is pressuring the complex with much needed rain falling overnight across Mato Grosso and Goias. US wheat futures are in retreat on talk of additional EU imports next summer. Corn is trying to rally on firm cash basis bids across the W Midwest. All of this argues for choppiness into December.