- Excluding soyoil, Chicago futures are sagging in Friday’s midday trade with corn/ wheat the downside leaders. USDA’s FAS did NOT confirm any fresh Chinese buying of US corn, soybeans or wheat, which was rumoured on Wednesday. Exporters have 48 hours to report new sales that are kept on their US books. Multinational exporters can always hold a US sale overseas until they want to shift back, which sometimes produces a delay in FAS daily reporting.
- Information suggests that the US WAS a seller of US corn/soy to China, it is just that the sales could have been spread around to several exporters that fall under the daily reporting standard (100,000 mt) and/or a sale will be shifted to their US sales books in coming days.
- The lack of China demand confirmation was taken as bearish with the driest areas of Brazil to start to see rain this weekend. The improved Brazilian weather forecast pressured Chicago valuations for the first half of the week and made a return visit today. Brazilian soy/corn values are sagging with rain prospects as farmers sweep old crop supplies out the door. A mixed close is forecast with end users buying corn and soymeal on the morning break.
- FAS did confirm a US corn sale to Mexico for 182,000 mt.
- The monthly US October Trade report showed that the US had enjoyed its largest positive Ag trade balance since 2016 at just over $3.5 billion dollars. The US exported a record 420.4 million bu of US soybeans (18.5 million over FGIS weekly Inspections). The prior soybean export record was set back in October of 2016 at 415.6 million bu. For the first 2 months of the crop year, the US has exported a record 706.4 million bu of soybeans. The US is easily on track to export over 1.0 billion bu of soybeans in the first quarter of the crop year.
- US October corn exports were 145.0 million bu vs FGIS October Inspections of 133.8 million bu. The increase was 11.2 million bu with September/October US corn exports standing at 294.7 million bu vs last year’s 269.4 million bu. We look for the US corn export pace to accelerate in early 2021 as US soybean exports slow and Gulf elevation costs are curtailed.
- US wheat/wheat flour exports were 64.5 million bu, which is down from September and last year. The US wheat export pace is suffering from high autumn prices and aggressive export offers from Australia on their near record new crop. The US wheat market will struggle on rallies and slow to keep pace with rising US cash corn prices. US wheat export demand did increase during November.
- Most of N Brazil will be dry for another 48 hours before showers/storms break out with regularity across Mato Grosso and Goias. Next week’s N Brazilian rain will be below normal, but the there is no indication of a return of the pure void of rain that has been witnessed here over the past 2 weeks. The lack of rain has caused crop stress/reduced yield potential. N Brazilian temperatures are forecast to be seasonal with highs ranging from the mid 80′s to the lower 100′s. Argentina and Southern Brazil will hold in an arid weather pattern for the next 10 days with limited rain. Temperatures will be cool next week with highs in the 80′s, but warming is noted beyond December 11.
- The December USDA report looms next week Thursday. Traders will not want to be overly bearish soybeans with USDA likely to raise US exports by 50-100 million bu and potentially make modest downward adjustments to S American crops due to November dryness. Yet, a China purchase confirmation, or the continuance of Argentine/S Brazilian dryness is needed to ignite a push above $12 January soybeans. Our view remains bullish as Northern Brazil receives rain while S Brazil/Argentina dries out. New highs in both corn and soybeans is likely in the weeks ahead.
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