- Low volume and mixed is Chicago at midday as traders tire on the ongoing political woes that are plaguing US/Chinese trade talks. Chile due to its worst social unrest in a generation, cancelled the November 16-17 APEC meeting this morning. Chilean President Pinera cited “common sense” for the cancellation with its president needing to be with its people. Chile’s social unrest is tied to rising costs and falling wealth with a hike in public transportation costs igniting mass protests several weeks ago. The unrest is likely to persist and could worsen.
- The Chile APEC cancellation left the US/China without a signing country. Neither side would be willing to ink such an agreement in their home country for the fear of sending out the wrong impression prior to Phase 2 or 3 negotiations. Thus, a delay appears likely for the Phase 1 Deal.
- Amid US talk that China would not commit to the timing or a hard financial commitment on US ag goods purchases, the APEC cancellation has some thinking that the December 15 US tariff increase is the next pressure point for both sides. The US has been reluctant to take this tariff increase off the table so that there is an event with consequences should the US/China fail to reach a deal. Time will tell, but traders don’t like market or political uncertainty.
- Chicago brokers estimate that funds have sold 1,300 contracts of corn, 900 contracts of wheat, and 2,500 contracts of soybeans. In soy products, funds are flat in soymeal while selling 2,100 contracts of soyoil.
- US weekly ethanol data showed that 1,004 barrels were produced last week vs 996 barrels a week ago. The gain is seasonal with the new US corn harvest but is still well below the pace of recent years. The extra production will produce a gain in the US corn grind to 295 million gallons vs 293 last week. US ethanol stocks were 887 million gallons, down 7% from last year. Research maintains that WASDE is 50-75 million bu too high with their October estimate of 5,400 million bu.
- Russian 2019 corn production is estimated at a record 14-14.5 million mt this year amid expanded seedings and record yields. Russia will export an estimated 5-6 million mt in 2019/20 which compares to 2.8 million last year. Russia looks to continue its expansion of corn production in the years ahead with sales to continue into Iran, Korea and Turkey.
- The midday GFS weather forecast offers less snow for NW IL and SE IA with totals up to 6-14″ for S WI and Ml. The midday GFS shifted the snows further north and east. The remainder of the forecast is little changed with rainfall of 0.25-1.50″ for the E Midwest/Delta while the W Midwest and Plains are largely dry for the next 10 days. The coldest air resides in the Plains and Rockies with lows in the upper teens to mid 20′s. The cold and dryness should push farmers to accelerate their harvest during early November.
- Today is a good example of markets that have become less anticipatory and more reactive when rain/snow and strong cash basis levels collide to rally spot Chicago corn futures. Wheat is trying to follow with soybeans declining on the potential for US/China trade signing delays amid the canceling of the APEC meeting. The narrative of world grain prices is one of oversupply. Except that SE Russian wheat stocks are tight, and supply needs to be railed from the Volga Valley and Siberia. This is placing a bid under Russian fob export offers.