- Chicago futures at midday are mixed but very close to unchanged in subdued volume. Corn has found modest buying/short covering as US ethanol stocks tighten further, suggesting there is a need to boost production longer term. General market activity is lacking amid no new US/Chinese trade news and as export sales on Friday will again confirm lackluster demand for US grains.
- FAS reported that China this morning purchased another 129,000 mt of US soybeans for 2019/20 (likely Dec-Jan) delivery. This morning’s announcement was largely expected following talk of recent buying from Chinese state-owned firms. Exporters this week have sold 235,000 mt of beans to China/unknown destinations. Key will be whether China opts to secure US beans for delivery beyond early February amid cheaper Brazilian fob offers.
- It is expected that FAS’s weekly sales report on Friday include 450-550,000 mt of corn, 300-450,000 mt of wheat and 1.2-1.5 million mt of soybeans.
- US ethanol production through the week ending Nov 8 totalled 303 million gallons, vs. 298 million the prior week but vs. 314 million gallons in early November a year ago. Production is rising seasonally but supply sourcing difficulties prevail. A much-improved pace is needed during the winter months to validate the USDA’s forecast. We note that cumulative Sep-early Nov weekly ethanol production is down 5% from last year. USDA projects ethanol’s corn demand draw to be unchanged from 2018/19.
- However, US ethanol stocks fell 38 million gallons to 881 million, down 11% on last year and the lowest since Sep of 2017. Margins are profitable and will stay as such amid elevated ethanol prices.
- Details of Egypt’s wheat tender are not yet available, but a larger share is likely to be given to Black Sea origin following sizeable tonnage of Russian offered competitively with French origin.
- The Buenos Aires Grain Exchange has lowered its Argentine wheat production estimate to 18.5 million mt, vs.18.8 previously and vs. the USDA’s 20 million mt forecast. Argentina’s wheat surplus is decreasing, but enlarged carry-in stocks will keep 2019/20 exports at/near record large. Argentine wheat exports peak seasonally in the Dec-Feb period.
- The midday GFS weather forecast is wetter in Argentina but drier across the Southern third of Brazil’s Ag Belt. The S American jet stream will move a bit northward over the next 8-10 days. This will push needed rainfall into the drier areas of Cordoba and Buenos Aires but will also act to trigger a lasting period of dryness in Southern Brazil. Extended range guidance allows normal precipitation to return to Southern Brazil beginning Nov 24, but close attention will be paid to S Brazil’s forecast in the days ahead. Recall building drought is difficult at tropical latitudes. But it is Southern Brazil where major crop problems have occurred in the past.
- Global cash markets continue to indicate adequate/abundant near-term supplies. The longer-term trend is steady/bearish until/unless Mother Nature says otherwise in S America this winter.