- HEADLINES: Chicago sharply higher on threatening S American weather and supply loss; Iraq rumoured to push back wheat tender.
- Chicago futures are sharply higher at midday on a combination of fresh investment demand and growing concern regarding S American weather. European rapeseed and rapeseed oil are sharply higher to limit up. The story in tightening world vegoil supplies is ongoing with Canada crushing its 2021 canola crop too quickly. The risks are growing that Canada could deplete its domestic canola supply without acute demand rationing. Amid the shortage of sunoil/rapeoil and canola, US soyoil became just too cheap ahead of the Christmas holiday. US Gulf soyoil is offered at 6 cents over January futures with Brazil’s offer at 8.5 cents over. US soyoil is the “cheapest source of world vegoil supply which is maintaining an active US export sales pace. The US has already sold 75% of the WASDE soyoil export estimate and it is only the end of the first quarter of the crop year. Soyoil price must limit US export sales as 3 renewable diesel retrofitted refineries start production in Q1 2022. h soyoil pushed above its 200-day moving average which has accelerated the investment fund buying. The bullish outlook for US soyoil and world vegoil prices has returned with the next upside price target being $0.60-0.615 basis March soyoil futures.
- The USDA reported the sale of 266,240 mt of US corn to an unknown buyer in 2021/22. Speculation has the buyer being Mexico or Canada.
- The 2-week S American weather pattern shows no sign of meaningful change. Limited rain will fall across S Brazil/Argentina over the next 7-8 days with high temperatures ranging from the mid 80’s to the lower 100’s. The midday forecast has reduced rainfall totals for Central Brazil in the last half of next week while regular heavy rains persist across N Brazil. The midday forecast is drier than the overnight run for Parana and MGDS. Crop sizes are shrinking across S America based on adverse weather. The early Northern Brazilian soybean harvest will begin between January 5-10 and sunshine and drier weather is desired.
- There is talk that the Iraqi wheat tender has been delayed until next week. Confirmation on the rumours is awaited from the Iraqi Government.
- US export inspections for the week ending December 23 were; 28.3 million bu of corn, 58.0 million bu of soybeans, and 10.0 million bu of wheat. All export totals were down from the previous week due to the pending holiday.
- For their respective crop year to date, the US has shipped 473 million bu of corn (down 83 million or 15%), 1,063 million bu of soybeans (down 313 million or 23%), and 437 million bu of wheat (down 97 million or 19%). Research argues that WASDE is too low with their US 2021/22 corn export estimate.
- Chicago brokers estimate that funds have bought 4,200 contracts of corn, 9,100 contracts of soybeans, 4,500 contracts of meal and 4,500 contracts of soyoil. The only Chicago grain where funds have been sellers is wheat selling 1,500 contracts. The CFTC will release their weekly CoT report this afternoon.
- The midday GFS weather forecast is slightly drier across Parana/MGDS than the overnight run. Limited rain looks to drop across Argentina/RGDS in S Brazil for another 2 weeks. The S American weather pattern is static with a weak cold frontal pass late next week to produce rain of 0.25-1.00” across Parana/MGDS. This amount will be well under what is needed to replace more than a few days evaporative loss. Argentina is hot/dry for the next 10 days with a new round of extended dryness slated into mid-January. And too much rain will fall across N Brazil that will slow the early harvest pace as localised flooding is a worry.
- A bullish outlook is maintained as S American corn/soy crops are in retreat. Parana’s Deral will not release crop conditions tomorrow due to the holiday. Chicago setbacks are only temporary unless a S American weather pattern change occurs. The forecast stays threatening into January 8.