- Today’s news has been filled with what seems to us to be a bad tempered, unstatesmanlike display of gratuitous accusation and finger pointing in what the world is watching. Yes, it is the US election, which has yet to see an outcome. And whatever that outcome is, it seems that it will be disputed in a legal challenge from whomsoever is deemed to have not won. Lord help us if we sink into such an electoral debacle – but it seems that whatever happens in the USA eventually finds its way to our shores. How the world stage can be dominated by either candidate, whatever the outcome, beggars belief!
- To more “normal” commentary……
- Mixed Chicago futures are the theme at midday. The grains (corn/wheat) are lower while soybean prices rise on concerning S American weather amid a US September soybean export estimate that was larger than expected. Traders are active bull spreading July/November ‘21 soybean futures or buying soybeans and selling either wheat/corn. The soybean market is reacting more vigorously to concerning S American weather forecasts with sold out fund managers wanting to re-establish their length. Fund managers appear more active in trying to position long in the complex on tightening US and world stocks. We look for a mixed close with contract highs in January soybeans at $10.885 being the next upside price target.
- The US DOW has rallied a sharp 700 points as it is risk on as traders try to get back into asset positions with a blue wave for the US Senate highly unlikely. That blue wave means that imposing higher tax rates or changing the current tax legislation will be difficult or impossible. Deciding who the next US President is still being counted/worked out with each side still claiming that they have a way to be in the White House over the next 4 years. Unfortunately, the 2020 election will widen the divide between the two US political parties.
- Chicago brokers estimate that funds have bought 8,000 contracts of soybeans, 4,100 contracts of soymeal and 5,200 contracts of soyoil. In the grains, funds have sold an estimated 4,800 contracts of corn and 3,100 contracts of wheat.
- The US Census Bureau estimated that the US exported a record 285.9 million bu of US soybeans in September, some 49 million more than export inspections had indicated. A year ago, the US exported 142.9 million bu of soybeans. And US Sept soyoil exports were massive at 180.2 million pounds with soymeal exports at just under 800,000 short tons. We note that in September of 2019, the US shipped out just 48,500 mt of US soyoil along with 754,000 mt of soymeal. US 2020 soybean/soyoil exports were well above expectations and considered bullish. The US exported 149.7 million bu of corn and 98.7 million bu of wheat. This compares to 79.8 million bu of corn and 85.0 million bu of wheat (excluding flour) in 2019. US corn and wheat exports were close to weekly inspection totals.
- Weekly US ethanol production equaled 283 million gallons vs 277 million last week, or down some 5% from last year. The US needs to equal some 285 million gallons going forward to reach the WASDE annual forecast for 5,050 million bu of corn consumed. US ethanol stocks rose slightly to 827 million gallons vs 823 million last week.
- The forecast lacks the regular rain for Central/Northern Brazil to maintain the soybean seeding pace. Sporadic rains will drop across N Brazil with even more diminished totals for S Brazil and Argentina. It is the lack of rain that is creating yield concern.
- And temperatures warm on the weekend with 80’s and 90′s becoming more frequent next week. Temperatures are currently cooler than normal across most of S America.
- Improved rainfall is desired across S America with our concern being that a La Niña pattern could maintain this dry weather trend into early December. The models continue to offer the potential for improved rains in the 11-15 day period. Until the rains in the extended forecast are pulled forward, our confidence in their development is low
- Dry S American weather along with the desire of fund managers to position long ahead of next Tuesday’s NASS/WASDE report has soy futures higher. A close above $10.88 Jan soybeans will open the market up to a target of $12.00. Corn and wheat are not finding the same type of speculative buying. However, it is imperative that Argentina produce a 2021 corn crop of at least 47 million mt.