- HEADLINES: Soybeans/soymeal surge to new rally high; GFSweather forecast offers no change in Brazilian weather pattern; China books 300-400,000 mt of US soybeans for Dec/January.
- Soybean and soymeal futures pushed to new rally highs while soyoil falls on oil share spread selling, while the grains are mixed. Chicago corn continues to sag for technical reasons with Friday’s reversal high unable to be exceeded. The Chicago market has all about “fund flow” determinate with soybean/soymeal charts bullish and pushing higher. Corn, soyoil, and wheat charts have not been able to turn around. Grain and soyoil charts are bearish, and until there is a chart-based signal for managed money to exit their growing short position, the trading mentality of fund managers is to sell rallies.
- The macro financial markets have offered bearish tailwinds with crude oil futures pushing to new lows for the decline at $78.50, and the dollar higher. The interest rate on the 10-year US note has fallen to 4.6% on recessionary worry. The market is see sawing back and forth between a US consumer that is spending and a Chinese consumer that is saving. The DOW is up 90 points at midday and looking to post its 7 consecutive daily higher close.
- We would maintain a view that Brazilian weather is concerning but could become alarming in another 10-14 days if their weather pattern does not change. The adverse Brazilian weather not only impacts soybean production, but also corn due to latent winter corn seeding dates. Brazilian farmers are in a quandary with the dry forecast leaving them unsure as when they should reseed crops.
- Chicago brokers estimate that funds have bought 5,900 contracts of soybeans while selling 1,200 contracts of wheat and 4,500 contracts of corn. In the products funds have bought 8,400 soymeal while selling 5,300 contracts of soyoil.
- The USDA confirmed the sale of 110,000 mt of US soybeans to China in the 2022/23 crop year. Rumours abound that China purchased 300-400,000 mt of US soybeans overnight for December/January.
- France has planted an estimated 53% of their winter wheat crop with wet soils to keep planting slow until late November. Planted wheat has been suffering from yellowing due to excessive water and a lack of nitrogen. It appears that EU farmers will cut 2-4% of their winter grain seedings due to adverse wet weather.
- Algeria has started securing wheat for LH December and FH January. Traders are estimating that 150-200,000 mt of wheat has sold at a price of $266/mt basis CIF. Assuming $19-23/mt for freight works back to $243-247/mt basis FOB. The wheat is said to be sourced from Eastern Europe or Russia.
- The US exported 90.8 million bu of soybeans, 124 million bu of corn, and 68 million bu of wheat during September. US Sept soybean exports were 12 million bu larger, and corn was 21 million bu bigger than 2022. US September wheat exports continue to suffer from Russian wheat export aggression and were 44 million bu less than 2022. September US soymeal exports were record large at 770,067 mt.
- The GFS weather forecast is dry with virtually no rain across Northern and Central Brazil into November 21. This is as dry as you will ever see Brazil heading into December. The lack of rain is startling farmers with seed germination suffering. Irrigation is unavailable and a deepening drought in the Brazilian Amazon is abnormal.
- High temperatures will hold in the 90s/lower 100’s daily. Such temperatures are some 5-9 degrees above normal which is adding to the soil moisture losses.
- Another round of heavy rain occurs across Southern Brazil this weekend and a second system in the last half of next week. 10-day rain totals are estimated in a range of 2-6.50” which adds to renewed flooding. This is a highly unusual Brazilian weather pattern that appears to be static. Closely monitor the daily forecasts.
- Brazilian weather is not alarming today, but it will be in another few weeks if the pattern does not change. The impact on S American soy/grain production would then be massive as double cropping opportunities pass. This is no place for new sales amid such threatening Brazilian weather. And the early harvest of Brazilian soybeans has been pushed backwards to February. Both Brazilian yield and planted area is being impacted and must be adjusted downwards.