- Soybeans were higher at the morning open and expanded gains into late in the day on fund short covering ahead of the November Crop Report, and strength in the soyoil market. Soyoil found support near the 50 day moving average and followed energy markets, which rallied on Mideast political concerns. Soybean export inspections were at expectations for last week and were just under 92 million bu. After a strong start to the year and record exports in September, the weekly export rate has levelled off over the last two weeks. Cumulative inspections now total 546 million bu versus 600 million last year. After the close, NASS reported that the US soybean harvest had advanced to 90% complete on a national basis, versus the five year average of 91% complete. Most of the Cornbelt are above 90%, though harvest in IN remains the farthest behind at 85% complete. General commodity trends are bullish with the CRB Index reaching a nine month high this week, yet funds are still heavily short the ag markets.
- December corn ended fractionally lower, but downside risk ahead of Thursday’s report is limited. We have documented managed funds’ current short position, which is still near record large, and crude’s rally has the potential to change the structure of global currency markets, note that even Brazil’s Real correlates strongly with crude value over time, and a close eye will kept on weekly EIA data and energy markets as a whole in the weeks and months ahead. Nationwide corn harvest as of Sunday reached 70% complete, up 16% on the week, but down 13% from average for early November. Of note is that progress in WI is not even half completed. Interior basis continues to strengthen in many locations. Otherwise, lesser feedgrain markets (barley) continue to rally, and it’s noteworthy that barley fob offers are at/slightly above Black Sea milling wheat. Increasingly work shows that that harvest lows have been scored.
- US and European wheat futures ended moderately higher, driven by positioning ahead of the USDA’s report (following another build in funds’ short position last week) and as the rally in crude futures shows no signs of ending. Geopolitical concerns in Saudi Arabia, coupled with falling US crude/gas stocks, have pushed spot WTI crude to $57.30. A further rally in crude will be watched closely, and could have supportive market implications. US winter wheat good/excellent ratings increased two points to 55%, and are now on par with the longer term average. Conditions rose substantially in MT, NE and TX, and were up four points in KS, but others states were little changed. Currencies in Russia, Australia, Canada and S America strengthened further today, although the Russian Ruble’s reaction to crude’s rally so far has been muted, We would highlight the strong correlation between currencies in Russia, Canada, N Africa and the Mid-East and energy prices longer term. Crude’s collapse triggered the recent expansion in global cropped acreage (via weak major exporter currencies), and so crude’s potential will be incredibly important longer term. Both the bulls and bears will struggle for leverage.