- Chicago grain futures are lower at midday while beans trade near unchanged amid better than expected export sales. Open harvest weather in the US, ongoing weak US corn and wheat export demand, and still a lack of confirmation of US-Chinese trade progress continues to act as a weight on ag markets. Macro markets remain elevated, with the Dow at new record highs and crude trading $1.20/barrel higher. Yet, concern that US row crop yields will be little changed in Friday’s NASS report have dominated early trading in Chicago.
- Through the week ending Oct 31 US exporters sold 19 million bu of corn, vs. 21 million the prior week; 13 million bu of wheat, vs. 18 million the prior week; and a sizeable 66 million bu of beans, vs. 35 million the prior week. China booked 35 million bu of beans, with EU destinations buying 14 million. Unknown destinations secured 9 million bu of corn.
- But otherwise US grain business was made only with traditional buyers. Corn export commitments to Taiwan, Mexico and Japan remain down 30% from last year.
- Pork export sales were a routine 16,600 mt, with China securing just 2,800 mt.
- For their respective crop years to date, the US has sold 468 million bu of corn, down 47% from a year ago; 774 million bu of beans, down 2%; and 549 million bu of wheat, up 9% from late October 2018. We doubt annual US and wheat and soy projections will be lowered in Friday’s release, but pace analysis suggests US corn exports will be reduced significantly.
- Corn export commitments to date account for just 25% of the USDA’s forecast, the lowest since 2006. On average, corn export sales as of late Oct account for 42% of the USDA’s estimate. Corn exports will be lowered 100-150 million bu to better fit the seasonal trend .
- We would caution against chasing today’s break in grains. Survey-based yield estimates in recent weeks have been placed very close to NASS’s forecasts in October. But recall NASS will resurvey harvested acres in ND and MN amid abnormally early snowfall. Interior basis levels remain elevated. This is likely to due to slow drying/harvesting. But a 3-4 bushels/acre decline in US corn yield and 1.0-1.5 bushels/acre soy yield can not be dismissed, though NASS’s yield estimates will largely put US supply debates to rest.
- The midday GFS weather forecast is drier in Argentina and wetter in NE Brazil in the 11-15 day period. High pressure ridging in NE Brazil is projected to ease beyond Nov 17, allowing seasonal rains to expand further across fringe areas of Brazil’s Soy Belt. Confidence in NE Brazilian rains is low, but model updates will be watched closely in coming days.
- Otherwise, the broad pattern is little changed. Daily showers will continue across some 65-70% of Brazil’s primary ag belt. Cumulative 10-day totals will be a seasonally normal 2-4″. Precipitation in Argentina will be more regional in nature. Argentina’s moisture demands are low, but a much wetter pattern will be needed by late month. Whether the EU model follows this drier shift in Argentina will be key this afternoon.
- Near-unchanged yields on Friday amid improving S American weather raises the burden on Chinese demand if rallies are to be sustained next week and beyond.