- Other than soyoil/November soybean futures, it has been a day of retracement in Chicago. Deliverable Chicago corn receipts were cancelled which is underpinning the December/March spread (only 1 receipt is outstanding at Ottawa) while wheat prices are under pressure from wet weather forecasts for the Central US Plains and SW Russia. After heavy early volume, trade volume has slowed at midday with the US DOW posting sharp losses of 800 points. The macros are pressuring Chicago grains with the US$ higher and “risk off” occurring ahead of the coming November 3 US election.
- Chicago brokers estimate that funds have sold 6,600 contracts of wheat, 4,500 contracts of corn, and 3,200 contracts of soymeal. Funds have bought 4,100 contracts of soyoil and 2,900 contracts of soybeans. A large fund sold 10,000 contracts of corn near the reopening as futures fell below Friday’s low. We doubt that this morning break was enough to correct the overbought condition.
- FAS reported the sale of 129,700 mt of US soybeans sold to an unknown buyer (rumoured to be either a China or EU crusher) with 135,000 mt of soymeal sold to the Philippines. No US corn was reported contrary to cash rumours of Friday.
- US weekly export inspections for the week ending October 22 were; 25.0 million bu of corn, 97.9 million bu of soybeans, and 13.3 million bu of wheat. US soybeans are taking up a large amount of Gulf export capacity leaving the grains with more routine weekly export totals. China imported 58 million bu of US soybeans last week (60% of total) with the Netherlands loading out 780,000 bu of soybeans from Chicago. We expect that US soybean exports will stay massive into year end as China loads out record purchases.
- For their respective crop years to date, the US has exported 239.9 million bu of corn (up 103 million or 75%), 405.8 million bu of wheat (up 15 million or 4%), with soybeans at 526.8 million bu (up 230 million or 78%). The US soybean export pace is likely to exceed 100 million bu in the weeks just ahead as China continues to actively load out prior purchases.
- EU corn and wheat prices are likely to work near parity as livestock feeders struggle with feed availability. Recently, South Korea has been booking US and optional origin feed wheat in lieu of corn. EU corn imports are likely to be cut sharply on a pure lack of GMO-free supply. EU grain prices must act to reallocate (swap out) Ukraine corn sales and allow for some of them to be sourced into the EU while non-EU corn demand is routed the US.
- A daily chance of rain exists across Brazil into November 8. 10-day rainfall totals are estimated in a range of 1.50-4.50″ with the heaviest totals falling across Minas Gerais and throughout NE Brazil. Temperatures cool to the 70′s/80′s to 90′s with lows in the 50s/60s. The coming moisture is quickening the pace of corn and soybean planting throughout S America.
- Chicago values are mixed with selling/profit taking noted. China demand for US soybeans is slowing (not ending), but with cash markets holding strong and the US corn/soy harvest winding down, futures cannot decline too far to make sure that the US farmer sells supply off the combine. Once the grain enters the bin, it is much more difficult to pry away. There is a real bull stocks story for world vegoils and higher prices are likely into year end. A close above $0.35 December soyoil futures confirms an upside target of $0.45-0.50 on reduced non-US soy crush and spot shortages of sun, palmoil and rapeseed oil. US corn futures need to confirm fresh China demand for the next rally leg. Any Covid-19 pandemic worsening would impact corn and US ethanol on reduced US driving.