• HEADLINES: Soybean meal surges, forces November soy to test $13.00/bu; GFS weather forecast wetter in Mato Grosso.

• Chicago futures are mixed at midday, with meal scoring newer rally highs and forcing Nov soy to test $13.00 as options expire. Meal in recent weeks has done the legwork in boosting crush margins, and despite mediocre US soy export demand, it is just tough to be bearish of soy cash prices given processor profitability. We should expect meal to enter a new phase of increased volatility at high prices, but most important is that physical Argentine soy supplies won’t be fully replenished until spring. We would also pointy out that crush margins in Brazil are working to boost product output there.

• Spot KC wheat has fallen to new lows for move. Corn is caught between. Mato Grosso soy planting progress will be published after the close. The details of this report this week and next are important.

• Spot Paris milling wheat is down €1.50/mt at €232, testing the lower end of the recently established range. The EU cash wheat market continues to probe for export demand following sluggish shipments to date. The lack of drought across the US Southern Plains, and additional soil moisture improvement in TX and eastern OK, has weighed on wheat futures. Recall NASS will publish its first national winter wheat crop rating on Monday.

• We would estimate today’s CFTC report showing managed money short a net 110-112,000 contracts of corn, vs. 109,000 last week, short 104,000 contracts of Chicago wheat, unchanged from the prior week, and short 1,500 contracts of soybeans, vs. 2,000 the previous week. We estimate fund length in soyoil dropped to just 5-8,000 contracts vs. 21,000 the previous week.

• Funds have not been net short of beans since Q1 2020, and we views it as premature to count on record Brazilian production in 2023/24.

• Soy’s story, in the US, centres on a clear need for crush capacity expansion. But grains lack a story, with corn/wheat volume as of midday exceptionally low. Ukrainian grain flows resuming and Russian wheat offered $20/mt below comparable EU origin weigh on recovery efforts, but funds’ sizeable shorts in corn and wheat suggest bearish news has been digested. Grains lack direction.

• Crude at midday is up $1.20/barrel at $84.40. The US dollar has retreated slightly from morning highs.

• The GFS weather forecast has trended wetter in Mato Grosso beginning Nov 7. The GFS forecast is in better alignment with overnight EU solution in allowed high pressure ridging to lose its influence on the Central/Norther Brazilian climate in early Nov. Rains eventually fall across tropical latitudes of Brazil, and weather-based focus next week turns to actual amounts and coverage. Otherwise, the GFS forecast is consistent in projected additional needed rains in Central Argentina but unwanted excessive precipitation of 3-10” in RGDS and Parana in S Brazil.

• We see nothing to disrupt positive corn/soy seasonal trends into at least winter. Debate will centre on the extent of recoveries, and this will be a function of S American weather exclusively Dec onward. Wheat is subject to Russian cash pricing, but Chicago gains further on KC amid each market’s respective export potential.

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