- HEADLINES: Soybeans lead midday rally on Chinese demand; Corn, wheat exports disappoint.
- Chicago futures are mixed at midday with the soy complex firm, corn slightly weaker and wheat caught in between. Wheat’s rally has paused amid reports of Iran struggling to make payment, while a host of major importer currencies weaken. The Turkish Lira today this morning fell to a new all-time low of just 1:0.10 US$, and wheat importers that are not major producers of crude will struggle amid soaring cash wheat and freight prices. And crude’s move to highs this morning has pushed the Russian Ruble to a new 15-month low, which raises the value of the Russian wheat when priced in US$. Russian interior wheat prices this week are again firm, with replacement in the Volga region calculated at $210 per tonne, vs. $200 last week.
- Last week we highlighted that total world wheat trade through the middle of October was up 9% year-over-year, which compares to the USDA’s projected growth of just 2%. Populations must eat but financing issues will be monitored more closely in the weeks and months ahead. However, certainly breaks in the global wheat marketplace will encourage consumption and the extension of forward supply coverage.
- Weekly US export inspections through the week ending Oct 21 featured a sizeable 77 million bu of soybeans, while The prior week’s soy inspections were revised upward by 6 million to 90 million bu. Corn inspections were a disappointingly low 21 million bu, vs. 41 million the prior week. Wheat inspections totalled just 5 million bu, unchanged from the previous week.
- For their respective marketing years to date, the US has shipped 299 million bu of soybeans, 45% below last year, 173 million bu of corn, down 24%, and 348 million bu of wheat, down 15% from mid-Oct 2020. We hear that China this morning secured upward of 10 cargoes of US soybeans off the PNW. The pace of new soybean demand is impressive, but the market must see solid weekly soy sales and shipment data in each week between now and January to validate the USDA’s annual forecast. Chinese crushers are expected to remain active in booking winter/spring supply needs from the US as Brazilian origin is no longer competitive for old crop delivery.
- Macro markets lean supportive. Spot WTI crude at midday is up $0.40 per barrel at $84.10, having testing $85.40 in early morning trade. The Dow is up 70 points. Spot Paris milling wheat looks to settle at new contract highs of €281.50 per ton ($8.90 per bushel). Rapeseed/canola futures in Europe and Canada are sharply higher, with spot EU rapeseed oil still perched above $0.80 per pound.
- Weekend rainfall and thunderstorms across the Central and Eastern Midwest, along with additional precipitation this week, will further complicate the remainder of harvest there. Downed crops remain the primary concern and very little fieldwork is expected in IL, IN and OH over the next 10 days. A trimming of yield there is probable by NASS’s final report in January.
- The midday GFS weather forecast is consistent with the morning run in offering another system to the E Plains, Midwest, and mid-South late this week. Moderate but steady rainfall is due Thurs-Sat, with totals in excess of 1” to favour E KS, MO, IA and portions of IN and OH. A drier pattern returns late in the coming weekend, but the corn and soy harvest is likely to be dragged into mid/late November east of the MS River.
- The midday GFS forecast keeps intact needed rainfall in Argentina in the 6-10 day period, while a favourable mix of rain and sun continues across Central and Northern Brazil.
- We maintain a strategy of using breaks to add to supply coverage. China’s pricing of US soy will be ongoing into late autumn. Weekly US ethanol production will continue at/near record levels. The EU wheat market continues to work to slow future export demand, with US origin to be more competitive in Jan-Feb 2022.