- Chicago futures are sharply higher this morning, driven mostly by optimism surrounding Presidents Trump and Xi meeting in late November in Argentina. Trump this morning tweeted he’s been in discussions with China, a central part of which has been trade. The market certainly doesn’t want to be caught short if a deal, or signs of a deal, gets done. Recall the issue in the soy complex isn’t so much ballooning US stocks, but rather much-reduced Chinese soybean demand as a whole.
- We estimate that managed funds this morning were short a net 72,000 contracts of soybeans, the most since January. Funds are estimated to be short 40,000 contracts of Chicago wheat and are net even corn. Our view is that a deal needs to be signed before one can turn bullish soybeans, but there is little for the market to do other than cover shorts when such news appears.
- US export sales through the week ending Oct 25 were mixed. Corn sales were a disappointing 16 million bu, up 2 million on the prior week but well below the average needed to meet the USDA’s forecast. Soybean sales totalled 15 million bu, vs. 8 million the previous week. Large cancellations were made by unknown destinations. China’s commitments have fallen to 960,000 mt. Wheat sales totaled 21 million bu, the highest since September. For their respective crop years to date, the US has sold 860 million bu of corn, up 28% from last year; 788 million bu of beans, down 29%; and 481 million bu of wheat. We would mention that wheat sales have been rising as the US Gulf market becomes more competitive. There is talk that excessive rainfall across the Plains in October (8-10”) will prevent any expansion in winter wheat acres there. The US balance sheets needs some measure of expansion to keep 2019/20 stocks above 750-800 million bu. Heavy rain impacts Central TX and parts of southern OK overnight.
- The EU/Black Sea forecast at midday is still dry. S American weather is favourable, with this season’s boost in Brazilian soil moisture to occur much faster than in recent years. The midday central US weather forecast is wetter across the Central Plains in the extended period, but these rains are expected Nov 16-17, much too far out to place much confidence in. Otherwise, too much rain falls across the Southeast and Eastern Midwest into next Tues/Wed. A welcomed drier pattern evolves thereafter. IN, OH and PA will be targeted with rainfall of 1.5-3.0” over the next 4-5 days.
- The world wheat market is beginning to pay more attention to changes in fob price relationships which increasingly favour the US and EU.