- Chicago futures at midday are weaker by varying degrees. Wheat is leading the way down, though there is little fresh wheat-specific news. Coming rainfall in Argentina will stabilise yields there, following modest reductions by private firms in recent weeks, and Argentine fob offers are highly competitive for early 2019 delivery. The US$ is also eyeing August’s high at 97 points. Otherwise, major exporter currencies are little changed, if a bit stronger in the Russia and S America. As such, today’s decline in wheat will again put Gulf offers below EU/Black Sea origin for Dec-Feb.
- It is clear following Egyptian results last week that US wheat competes for non-traditional business at $4.95-5.15, basis spot Chicago. The market needs to see a more steady flow of export demand to rally further, but we highly doubt Russian cash prices can trade lower between now and early 2019. Ruble strength is further restricting exporter margins. We also mention wheat and soybeans are again nearing oversold levels.
- Brazilian soybean planting this week is estimated at 64% vs. near 50% last week and 43% on this week in 2017. The Brazilian forecast next week may be a bit too wet, with accumulation Nov 5-13 pegged at 4-8” in Mato Grosso, Goias and Parana. Newly planted crops will be well watered though.
- Wednesday’s weekly EIA report should include a modest boost in US ethanol production and a sixth consecutive build in weekly crude stocks. Ethanol margins, basis futures, remain depressed. Brazilian ethanol prices are down slightly this week but maintain a sizeable 33% premium to US Gulf origin. Brazil will ramp up corn-based ethanol production moving forward, but in the near term Brazil’s sugarcane harvest looks to be at a 12-year low. Official monthly biodiesel production (in August) will also be released Wednesday. WTI crude is down $0.75/barrel at $66.30. Lows in early and midsummer were posted at $63.50-64.50. EU milling wheat futures look to settle €1.50/mt ($.05/bu) lower.
- The central US weather forecast has eliminated chances for meaningful snowfall across the Dakotas and Western Midwest into Nov 14 but otherwise is little changed. A more active pattern of rainfall begins in the next 24 hours. Moderate to heavy rainfall favours the Delta/Southeast and Eastern Midwest Thurs-Sat. The heaviest totals, 1-3”, will favour AR, TN, KY, IN, OH and PA. Two additional systems will favour the Eastern US in the 6-15 day period, with excessive totals possible in MO, IL, IN and OH.
- Corn and beans are stuck in range unless S America’s climate pattern turns hot/dry in Dec/Jan. Wheat is too cheap below $5.00 amid steady world cash prices, rising interior prices in Russia and amid lingering heat and dryness in Germany, Poland, Ukraine and Russia.