- HEADLINES: Chicago corn and wheat push to new lows on fund selling prior to first notice day against December futures; China buys 3-5 cargoes of US soybeans for February.
- Chicago futures are weaker at midday with corn/wheat futures pushing to new contract lows. Fresh news is lacking for the drop, but the breaking of contract lows in the grains ahead of first notice day triggered resting sell stops. Wheat and corn futures sit at multiyear lows. The US wheat drop followed the fall in Paris wheat futures last week. The last time that Chicago wheat was this low was August of 2020 during the height of the pandemic.
- Traders are discussing large deliveries against December Chicago wheat and corn, which has pushed out calendar spreads and pressured flat prices. Traders remember the large Chicago wheat deliveries that circulated during the September delivery period.
- Soybeans/soymeal futures are lower on the prospect of improving Northern Brazilian weather amid the prospect of better rains after December 4. Light showers have been occurring, but the crop conditions are in decline across Northern Brazil as measured by the NVDI indexes. Soyoil is rallying on cash strength and the ongoing search for new renewable diesel feedstock as new plants prepare to come into operation in early 2024.
- There were no new daily sales announcements, but China is said to have purchased another 3-5 cargoes of US soybeans on the morning break off the Gulf/PNW.
- The USDA reported that in the week ending November 23, the US exported 16.0 million bu of corn, 53.0 million bu of soybeans, and 10.2 million bu of wheat. The wheat and corn inspections were below trade expectations while soybeans were in line. In their respective crop years to date, the US has exported 286.1 million bu of corn (up 57 million or 20%), 614.3 million bu of soybeans (down 78 million or 11%), and 298.5 million bu of wheat (down 90 million or 23%). US wheat exports are struggling even though the sales pace has improved.
- Chicago brokers report that managed money has sold 8,500 contracts of wheat, 8,200 contracts of corn, and 2,300 contracts of soybeans. In the products, funds are flat in soymeal and have bought 2,300 contracts of oil.
- Newswires are confirming cash talk that China delayed a few cargoes of French wheat from December into March. The reason for the delays is not known, but the Chinese wheat import program slowdown has raised European eyebrows that China may wish to delay other shipments. China has a massive corn import program underway from Brazil which along with an active late season soybean program may be delaying wheat imports. China has pledged to secure 9.2 million mt of wheat annually as they became WTO members back in 2001. The US challenged and won a WTO case against China and won, and since China has become the world’s largest wheat importer of over 10 million mt.
- The midday GFS weather forecast is drier across Northern Brazil with limited rainfall for at least the next 6 days. There will be spotty afternoon thunder storms, but organized and meaningful rain will be lacking. High temperatures range from the upper 80’s to the lower 100’s which is 4-9 degrees warmer than seasonal averages.
- Better rain is forecast to fall after December 4 across N Brazil, but heavier totals are pushed back into the final 2 days of the 10-day forecast. N Brazilian soybeans require improved rainfall totals as the bloom period starts.
- Southern Brazilian weather stays wet with rains of 2.5-6.00” that fall every 2-3 days. The overall S American pattern stays the same, better Brazilian rain needs to be pulled forward in the forecast.
- The CFTC CoT report will be released this afternoon as the funds pile into a larger net short grain position on the new contract lows in corn/wheat. The break to new lows has the fund algos sell, it is almost that simple. Farmer selling from the US, Brazil or Argentina is non-existent. First notice day against December futures looms which is forcing additional liquidation. US and world soy stocks are tightening, corn will follow but the bottoming process takes time.