- It has been a mixed morning in Chicago with the grains lower and the soy complex higher on pre report positioning and fund dealings. Funds are heavily long soy vs. the grains on spreads, and they are pushing their case based on growing profits. Moreover, the USDA November Crop Report on Thursday is expected to confirm enlarged 2017 US corn yields with a decline in the 2017 US soybean yield. Pre report positioning is ongoing with resistance noted just above $10.00 in January soybeans while support rests under $3.46 in December corn. Chicago December wheat remains bound in a range of; $4.10-4.30 ahead of 1st notice day and weak cash markets. We look for existing midday trends to continue into the close, and for low volume trend to persist into Thursday. If prices are to move ahead of the Thanksgiving Day holiday, it will have to be post the report on Thursday and Friday.
- Argentine President Macri is moving again to help farmers with a proposed tax break for fertiliser purchases and applications. Fertilisers would be tax deductible, a further incentive for Argentine farmers to plant more corn. There continues to be rumors that Macri could alter his proposed export tax reduction program for soybeans (0.5% per month from January forward) due to elevated cash flow needs of the Government. No confirmation of the soy export tax rumors are offered, but a similar change occurred last November. The Argentine Government continues to bet on its farmers to raise its GDP rate.
- Black Sea fob wheat values are slipping as active shipments continue from Russia, and the weather forecasts hint that Russian loadings will remain active for another 14 days. 2017/18 Russian wheat export estimates are rising and could reach 34-35 million mt with favourable weather conditions into December.
- Pre report bets are being placed (bullish soy/ bearish grains) as S American weather forecasts are not straight forward favorable with La Niña building rapidly. There will be weather scares, and the big question is who is going to sell the grains to new lows? Farmers are not interested in selling cash corn at these prices and funds are heavily short.