- Chicago ag futures are mixed at midday with corn/wheat weaker while soy futures are steady to slightly higher. The volume of Chicago trade was active after the opening but has slowed at midday. Profit taking and US farm selling has capped the early rally with nearby spreads reflecting the weakening cash basis trend. We look for a mixed close, but the risk is ongoing dry S American weather which will determine the opening on Sunday. It the dryness across Argentina and Southern Brazil that is garnering considerable trade interest.
- The USDA will release their 10 Year Baseline report at 2 PM CT. The Baseline Report is released twice a year with the last update occurring in February. The November Baseline is used for US budgetary purposes and should offer insight on future China demand. China corn demand has been a welcome late summer development, but USDA has failed to fully recognise China purchases. We look for a more optimistic assessment from WASDE in the November Baseline compared to its February estimate. The Baseline incorporates the October WASDE report and we wonder “out loud” why doesn’t WASDE wait to release the Bi-Annual Baseline Report next week, which incorporates the November Crop Report.
- FAS reported that private exporters sold 132,000 mt of US soybeans to China and another 272,150 mt to an unknown destination (rumoured to be China) for a total of 404,150 mt. There was also a sale of 206,900 mt of US corn to an unknown destination and 30,000 mt of US soyoil to South Korea. The sales help confirm that China booked US soybeans on Wednesday. There are rumours that China booked an additional 4 cargoes of US soybeans for late December-February and 4 cargoes of Brazilian soybeans early this morning. Chinese sources report that China crushers need to secure an additional 2 million mt of US soybeans for early 2021, before shifting their demand entirely to S America.
- The Ukraine corn harvest has reached 69% and the yield data, although improved, remains depressed. Modelling of Ukraine reported yields calls for a final crop of 29-30 million mt, well down on the October WSADE estimate of 36.5 million. WASDE is expected to cut their Ukraine corn crop on Monday and raise US corn exports accordingly. The decline in the Ukraine crop is a bullish surprise and hints are a 1.5-2.0 million mt decline in the Russian corn harvest. The world 2020 corn supply could fall 12-16 million mt on Tuesday. The world corn supply is in fast retreat.
- US ag markets appear to be paying less attention to the Covid-19 infection rates as a positive vaccine efficacy announcement is expected in weeks. Moreover, medical professionals appear equipped to maintain a lower mortality rate. Yet, a positive vaccine announcement is key to 2021 GDP growth.
- The midday GFS weather forecast is consistent with prior runs with limited rains over the key crop areas of S Brazil/Argentina. The best chance for rain will be across S Cordoba and La Pampa next weekend. Sporadic and below normal rainfall will persist across N Brazil with totals being some 40-65% of normal. The best rains fall across EC Brazil next week. Temperatures warm next week with cooling across Argentina after November 14.
- The big technical buy signal will be issued with a close above $0.355 in Dec soyoil today. Soyoil is breaking above key resistance which argues for $0.45-0.50. Soyoil has not closed above $0.35 since 2017. US farm selling will subside next week as the 2020 harvest ends. Seasonal trends turn bullish for Chicago into Thanksgiving. Yet, it is S American weather that will determine the extent of the Chicago rally into year end. The current dry trend is worrisome with seeding being further delayed.
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