- Row crop markets are steady to weaker amid the coming acceleration in harvest as FAS’s daily export reporting system stays quiet. US and world wheat markets are firm as a reduced Australian crop is digested as export demand is being found in Europe. Volume remains mediocre. The USDA’s November reports are awaited.
- There is renewed uncertainty over the extension of bio diesel credits as the cost of some 30 tax credit extensions is being debated within Congress. Support for those extenders lacks enthusiasm. Recall US biodiesel production has been below year-ago levels for three consecutive months amid weak/negative margins. The USDA in October forecast biodiesel’s soy oil demand draw to rise 500 million lbs in 2019/20.
- US ethanol production through the week ending last Friday totalled 298 million gallons, up 3 million on the prior week but down 16 million gallons (5%) on the same week in 2018. Weekly US ethanol stocks, however, were up 33 million gallons to 919 million. Spot ethanol futures are down slightly at midday, with futures-based ethanol margins retreating as Dec takes over the spot position.
- US crude stocks less reserves, as expected, were up 7.9 million barrels. Current US crude stocks are up 4% from a year ago, and look to exceed 2017 levels by late Nov/early Dec. Spot WTI crude has extended overnight losses to $0.90/barrel. The rise in US crude stocks in recent weeks has occurred despite ongoing cuts to oil rig counts, which are down 186 since Jan 1.
- The Brazilian Real continues to lack follow-through buying and is trading 1.7% lower today. Brazil’s pension reform bill will support on breaks, but today Brazil held an auction for oil drilling rights, which was met with tepid demand. Brazil aimed to make upward of $107 billion Reais from the auction but only found $70 billion, most of which was from state-owned Petrobras. Brazil still faces a need for cash. Ongoing weakness in the Real will further boost new crop domestic soybean prices.
- The midday US forecast is wetter in the Central and Eastern Midwest beyond Nov 19. The GFS forecast includes potentially heavy snowfall across IA, MN and ND in the 12-15 day period, with rainfall of 0.50-1.50″ offered to IL and WI.
- We view the GFS as being overdone with any coming pattern shift, but the EU model will be watched closely this afternoon for confirmation.
- The midday S American forecast is wetter in Mato Grosso and Goias in Central Brazil and much wetter in Central Argentina than previously. A pattern of daily showers will be established across the heart of Brazil’s Ag Belt into Nov 19. The model also features temporary but important shifts in S America’s jet stream that will allow soaking rainfall to impact Cordoba and northern Argentina next Tues-Thurs and again Nov 19-22. This rain needs to materialise following lingering dryness in Argentina.