- HEADLINES: Wheat recovers amid lingering uncertainty over export corridor extension; Row crops falter on unexciting export demand.
- Row crop futures are weak but off session lows at midday, while wheat in the US and Paris sit near unchanged. Export sales were ho-hum across the board, but Russia reiterating its decision to resume participation in the export corridor does not mean the corridor will be extended beyond Nov 18 lends support. Daily wheat price discovery hinges almost fully upon Russia’s decision over the export corridor and we would strongly caution against chasing daily moves.
- The US dollar index is up 0.7%. Crude is down $1.20/barrel at $88.80. The Dow this morning, too, is off session lows but still down 80 points.
- US corn export sales through the week ending Oct 27 totalled 15 million bu, vs. 10 million the previous week but still some 20 million below the pace needed to meet the USDA’s target.
- The weak pace of export sales and shipments continues to reflect US corn’s non-competitive position in the world market, which remains intact into Dec amid elevated Gulf basis levels. Additionally, we note that spot Brazilian basis has been unmoved in recent weeks. Brazilian supplies will be tightening Jan onward but supplies there are abundant today. There is also talk of China buying decent tonnages of Brazilian origin corn, with delivery split between winter and spring.
- US soybean sales in the week ending Oct 27 were 31 million bu, vs 38 million the previous week and right at the average needed to meet USDA’s forecast. Meal sales totalled 122,000 mt, the lowest of the young crop year as premiums to S American origin have widened to $20-25/mt, vs. $5-15/mt in mid-October. Wheat sales totalled 13 million bu, vs. 20 million the previous week.
- The USDA is fully expected to trim the 2022/23 US corn export forecast by 100 million bu in next week’s November WASDE. Soybean and wheat exports will be left untouched. Recall US wheat exports are already projected at the lowest level since 1969/70. Soybean export demand is fine but sales of 30+ million bu are needed into late winter, and this will prove difficult without weather threats in Brazil in Dec-Jan and associated increase on quoted fob basis levels there.
- This week’s drought monitor showed another round of expansion/intensification in KS and across the Dakotas. This along with the lack of projected rainfall across the W Plains bodes poorly for winter wheat crop condition improvement.
- Despite coming rainfall across the far E Plains and Upper Midwest, lasting/material improvement in Mississippi River water levels is unlikely. A modest boost in gauge readings is forecast next Tues-Thurs across the central Mississippi river, but not elsewhere, and river level contraction resumes Nov 11-12.
- The midday S American GFS weather forecast is much wetter across Western Argentina and key areas of Cordoba in the 6-10 day period. Cumulative rainfall of 3-4” will impact this region Nov 10-13, and while confidence in forecast details is low (the GFS is likely overdone) there is broad agreement that needed rain will expand into Argentina late next week. Mato Grosso in central Brazil stays arid. Normal showers return to South-Centre Brazil beyond the next 6-7 days.
- Markets will struggle to see beyond the week ahead amid outsized geopolitical influence and the uncertain timing of La Niña’s end this winter. A lasting change in direction is unlikely prior to late Dec/Jan when S American yield potential is better known.