- Chicago futures are mixed at midday with the WASDE December report out tomorrow. The soybean market has held firm on rumoured China demand while grain rallies are capped by large world crops and an expected cut in US 2019/20 corn exports. We look for a mixed close (soybeans firm, grains lower)with all eyes on whether US President Trump decides on the Phase One US/China trade pact later this week. Whether the US December WASDE report is bullish or bearish, it is the state of US/China trade that determines price action into the New Year.
- Rumours abound that China secured 1-2 million mt of US soybeans out of the Gulf amid firming cash basis bids. Traders speculate that China is making the soybean purchases as a goodwill gesture with US/China negotiations ongoing. It is likely that China’s State importers of Cofco or Sinograin are the buyers.
- Chicago brokers estimate that funds are flat in wheat and corn, but buyers of 4,000 contracts of soybeans, 3,000 contracts of soyoil and 900 contracts of soymeal. Funds are not showing any interest in adding to their long wheat or cutting short corn posit ions.
- We cannot imagine that private Chinese crusher would step forward for US soybeans amid the uncertainty regarding US/China trade ahead of a key December 15 deadline looming from US President Trump. Commercial sources indicate that China still has 3-5 million mt of soybean import needs to cover from the US before the arrival of the new Brazilian soybean crop in February.
- US weekly export inspections for the week ending December 5 were; 18.9 million bu of corn (down 338 million or 57%), 48.7 million bu of soybeans (up 114 million or 22%) and 478 million bu of wheat (up 73 million or 18%). China shipped out 30.5 million bu of US soybeans last week or 63% of the total. The US corn export pace remains deeply disappointing with sales and shipments well behind levels needed to reach the WASDE annual forecast.
- Argentine farm selling has dramatically slowed at the start of the week as farmers hold their collective breath on when the new Fernandez Government will raise export taxes. Most expect increases to be announced this week. And the Brazilian Real and Argentine Peso are slightly firmer. US farmers are also light cash sellers amid the hope that US President Trump will approve a trade deal with China. It is a big week for grain market moving news.
- The midday GFS S America weather forecast is similar over the next 8 days, but wetter for Argentina during the 9-15 day period as several fronts work through the country. S Argentine rainfall during Dec 17-25 is estimated in a range of 0.75-2.00″, a wetter change. Dryness will remain an issue across NE Brazil with the forecast being slightly warmer. A ridge of high pressure over NE Brazil would move rain southward into Argentina. Today, Brazilian crops are in mostly good condition.
- Soybeans are the bullish Chicago leader amid the large fund short position and new Chinese goodwill buying of 1 -2 million mt of US soybeans. US corn and wheat lack export demand that would allow the grains to follow (beans). Malaysia will be out with their monthly production/stocks data overnight with USDA’s WASDE due out Tuesday. But the big event will be decided on the weekend as US President Trump decides on a Phase One Deal with China. US/China trade deal holds the best hope for a nearby recovery.