- December long liquidation ahead of first notice day and sloppy cash markets are producing lower Chicago trade at midday. Corn/wheat futures are providing the downside leadership while January soybeans pulled back from $12.00 resistance for the fourth time. Cash fob basis bids are steady in Brazil with traders assessing the recent and upcoming hot/dry weather across N Brazil and what it means to final crop sizes. Amid the coming US holiday, no one wants to add to risk following the recent Chicago rally. A lower close is expected on the push to exit December futures ahead of the holiday.
- US cash soybean/corn basis is sloppy with new China demand lacking. Corn/ soybean traders will be looking to Friday’s weekly export sales report to determine if China is a residual buyer or cancelled out of a few soy cargoes on rising Chicago prices. With China having already purchased an estimated 33-34 million mt of US soybeans, the slowdown in their buying was seasonally expected. We are not looking for large US switching, or cancellations as Chinese buyers are less than certain that Brazilian sales contracts will be performed, and they still have an obligation under the Phase One Purchase program. Tightening 2020/21 US corn and soybean end stocks offer support on corrections.
- Chicago brokers estimate that funds have sold; 6,000 contracts of wheat, 5,900 contracts of corn, and 2,300 contracts of soybeans. In soy products, funds have sold 2,900 contracts of soymeal while buying 3,800 contracts of soyoil.
- The FAS weekly export sales report will be released Friday due to the US Thanksgiving Day Holiday. The CFTC CoT report will be published Monday afternoon. The sales numbers will be released before the Chicago opening at 8:30 am on Friday.
- Tuesday’s Chicago final open interest report showed that there were 91,564 contacts of December corn, 24,571 contracts of December soymeal, 18,961 contracts of December soyoil, and 15,037 contracts of December wheat open. Everything but Dec corn futures has reached reasonable pre delivery open interest levels.
- US weekly ethanol production rose last week to 291 million gallons, the best since when Covid-19 erupted in the US. There is no evidence that US increasing infections has had a deeper negative impact on US gasoline consumption. Research argues that based on the weekly data that WASDE will hold the US corn grind at 5,050 million bu. As vaccines become more widely available in Q1, US ethanol use could rise 50-150 million bu.
- The midday GFS weather forecast is dry for Mato Grosso, Goias, Mato Grosso Do Sul, and Parana over the next 10 days_ There are hints of better rain in the 11-15 day period, but confidence in this rain is low. The models have been over-forecasting rainfall in the 11-15 day period for weeks. Near to above normal rainfall is forecast for RGDS with totals of 1-3.00” in the next 7 days. Drier weather returns thereafter.
- The Argentine forecast was drier beyond the next 4 days. Showers have started to drop across E Argentine, how much rain that falls into the weekend will determine soon to pollinate corn yields. 4-day rainfall totals are estimated in a range of 1.00-3.50″. It was extremely hot across Argentina yesterday with highs ranging from 99-107 degrees which produced acute first corn crop stress. Argentine corn will start to pollinate on Dec 10 across N Cordoba/N Santa Fe.
- Wheat rallied 10 cents on Tuesday and declined 15 cents on Wednesday with no change in news or fundamentals. Corn is following wheat lower on December long liquidation. The tightening supplies of world minor vegoil supplies is rallying soyoil, while the soybean market awaits the Nov 30 weather forecasts to gauge N Brazilian rain chances into mid-December. Sunday’s Chicago trade will be highly important and volatile depending on S American weather.