- Chicago grain futures are higher at midday. The overnight rally in corn and soybeans has persisted with wheat recovering from early fund selling. The US wheat markets are having trouble sustaining breaks below $5.80 December Chicago with world wheat fob price offers holding steady or increasing. Any lasting pressure in US wheat comes from fund selling until weakness can be sustained in the EU/Russian fob wheat market. Chicago trading volume is light with fund activity slowing from last week.
- The delayed CFTC CoT report (after the close today) is expected to show that funds have increased their net long position following Tuesday’s USDA report rally to record levels. Fund managers are not willing to part with their corn/soy/wheat length heading into the heart of the S American growing season.
- We look for a higher Chicago close with commercial sources indicating that China is asking for US corn export offers following last week’s break in basis and futures. US corn is back on China’s shopping list which could support a rally to new rally highs should COFCO push the button on a fresh US purchase.
- Chicago brokers estimate that funds have bought 3,400 contracts of corn, 2,900 contracts of soybeans, and 1,200 contracts of wheat. In the soybean products, funds have bought 2,500 contracts of soymeal and 3,200 contracts of soyoil. Chicago soyoil futures have been able to push above Friday’s high which is sparking new fund buying. Cash vegoil markets continue to rise on supply tightness, a trend that goes back to late September. The next upside price target in December soyoil futures is $38.11 cents, the 2016 high. A close above this price sets up a longer-term target at $45-50 cents.
- NOPA estimated a record US soybean crush rate for any month of 185.2 million bu, surpassing expectations by some way. The industry was expecting a crush rate of 177 million bu. We note that the US soyoil yield (new crop) was 11.6711 per bushel with October soyoil production of 2,162 thousand bushels. NOPA member soyoil stocks were 1,487 million pounds, up modestly from expectations and last year. Amid such a strong US crush, domestic demand for US soyoil was record large. NOPA member October soymeal exports totaled 945,134 tons, down slightly from September, but above October of 2019. We see the NOPA crush report as bullish.
- US weekly export inspections for the week ending November 12 were; 32.2 million bu of corn, 82.3 million bu of soybeans, and 12.0 million bu of wheat. Last week’s US soybean exports were raised to a crop year high of 104.8 million bu (up 13.1 million). FAS has been continually raising US soybean exports from prior weeks amid the size of the US soybean export program and the amount of container trade. The US has now exported a record large 715 million bu of soybeans or 178% of last year’s pace through mid-November. US corn exports are up 127 million bu or 74%.
- Mato Grosso farmers report they are running out of time for soybeans to germinate and to seed a winter corn crop in early March. Mato Grosso rains seasonally decline in May and the winter corn crop must be planted by Mar 10 to have the crop pollinate with adequate soil moisture. Rain is desperately needed to aid the Mato Grosso soy crop that is struggling to be established.
- The midday GFS weather model is like the overnight forecast. The best chance of rain across N Brazil is in the next 5 days. Thereafter, the 6-14 day forecast returns arid with rising temperatures. S Brazil and Argentina hold in an arid weather trend with any rains shifted northward to Paraguay and RGDS in Brazil in the 10-14 day period. This leaves much of Argentina in a below normal rainfall trend into December. The rainfall outlook for December becomes increasingly important due to the ongoing fall in N Brazil and Argentine soil moisture.
- The US cash markets are working through last week’s large sales. However, threatening S American weather and the massive US soybean export program to China is underpinning Chicago values. A bullish outlook is maintained with US farmers slowing future cash grain sales. However, a sizeable rally may have to wait until late November when the forecasts can look forward into December S American weather conditions.