- Chicago futures are mixed at midday, with beans up, wheat down and corn caught between. It is more of the same in US wheat futures as the US$ rallies to new weekly highs and US wheat export sales this and next week will be routine and limited to traditional buyers. We have previously highlighted that Russia’s dominance will likely not continue beyond early December, but the market needs a steady flow of export news to maintain rallies.
- This week’s EIA report is neutral crude and supportive ethanol and corn. US ethanol production through the week ending last Friday totaled 311 million gallons, up 10 million on the prior week and the highest since late August. Weekly ethanol stocks fell to 953 million gallons, down a hefty 50 million on the week and the lowest since mid-September. A combination of large domestic blending and exports is suspected. Weekly ethanol stocks/use fell sharply, and ethanol futures look to be scoring a seasonal bottom. Crude stocks less strategic reserves last Friday totaled 426 million barrels, up another 3 million from the prior week and up 32 million barrels from late summer. Crude stocks continue to recover, though remain 6% below this week a year ago. We caution against turning bearish energy markets as spot WTI nears oversold territory. Indonesia and Brazil have plans to boost biodiesel blending mandates. Indonesia is targeting mandatory use of B20 in all machinery. Brazil’s National Council for Energy Policies has proposed boosting biodiesel blends from 10% to 15% by 2023 at the rate of 1% per year. If realised this could have a major effect on Brazil’s biodiesel production in the years ahead.
- Australian wheat replacement costs are rising again as deliveries to major elevators are lower than expected. Replacement price in S Australia, a major exporting state, this week is pegged at $8.35/bu.
- The midday central US weather forecast has turned abruptly colder in the 11-15 day period, though confidence in this is lacking. Other model guidance is broadly warm in November, and the EU release this evening will be monitored. Otherwise, the GFS maintains a welcomed drier pattern beginning late next week, with precipitation in the 8-15 day period to be rather light/scattered in nature. Any rain/snow that does fall in the extended period will favour the E Midwest. Soaking rainfall of 2-3” will impact the Delta/Southeast, IL, IN, OH and PA today through next Mon/Tues.
- Rallies in corn and beans will struggle as the trade moves closer to analysing S American supply and demand. New wheat sales would not be advised as interior Russian prices rise, wheat futures near oversold territory, as fund length has been liquidated. Note that the number of long spec wheat positions in Chicago is the lowest since the spring of 2016.