- Pre-report positioning remains the morning theme in Chicago with soyoil futures breaking out to the topside on the charts. December soyoil futures has surged to new rally highs (above the late October top at $35.13) with the next upside price target being the late summer highs at $36.00. The rally in soyoil has supported soybean futures as funds continue to use the soy complex as their long peg. Corn and wheat futures are sagging on large crop ideas and a continued decline in world wheat values. The grains lack a story, but if the USDA does not shock traders with a bearish corn yield on Thursday morning, fund managers appear to be willing to take profits off the table with energy prices rising on Mid-East political tensions. It is estimated that funds are net short a record 220,000 contracts of corn and 124,000 contracts of Chicago wheat.
- Egypt’s GASC purchased 120,000 mt of Russian wheat for late December shipment at $196.50/mt which in using $13.50/mt for freight, works back to a CIF price of $210/mt. The C&F price is down $2.00 from recent purchases and reflects the softening price structure in world wheat values. The EU is becoming more aggressive in its fob wheat offers as its need to raise exports is increasing. The net result is that the US’s export window of opportunity is narrowing with favourable weather offered for Black Sea grain loadings for a few more weeks.
- US ethanol production was equal to last week at 1,057,000 barrels/day. This would consume some 311 million bu of corn, just below the prior all time record set in 2016. Weekly US ethanol stocks fell 3 million gallons to 897 million, but the total was still up 11% from last year. US unleaded gasoline stocks at 209.5 million barrels, are down 5% from last year, while US crude oil stocks are down 6% from last year at 455 million barrels.
- The S America weather forecast is little changed from the overnight run with 10 days of drier than normal weather for S Brazil and N Brazil. The drying trend will help accelerate the spring seeding pace, but rain will be needed beyond November 20 from preventing soil moisture from reaching short or very short levels. The good news is that no extreme heat is forecast. Rains will persist across N Brazil for the rest of the week before a drying trend evolves. Temperatures look to average below normal for the next seven days with some 90’s creeping into S Brazil and Argentina on the weekend (and beyond). The forecast is largely favourable assuming that the rains return in the 11-15 day period across Argentina and S Brazil.
- Very near term market price direction will be provided by the USDA’s updates on Thursday, but as mentioned previously any post-report break will bought, and any rally will be sold by the farmer. Until more is known about S American potential (in January) choppy, sideways trade will persist. Strength in energy markets is noteworthy.