- Chicago ag values are mixed at midday, with markets digesting this week’s FAS export sales report along with final Canadian production numbers posted by Stats Canada. The extended range Brazilian forecast also maintains an erratic pattern of rainfall across Mato Grosso and Goias beyond Dec 10, which is further supporting global oilseed futures.
- Stats Can pegged final Canadian wheat production at 35.2 million mt, up 200,000 mt from the USDA’s number and a new all-time record. Canada’s exportable wheat surplus will also be a record large 25.4-25.6 million mt in 20/21. Stat Can’s wheat production hike along with a larger Australian crop only adds to non-US wheat production. Competition for world trade continues to weigh on rally efforts in cash wheat markets.
- However, Stats Can lowered final Canola production to 18.7 million mt, vs. USDA’s 19.4 and vs. the trade’s average guess of 19.3 million. This downgrade will further tighten the global canola balance sheet, with USDA in November already projected global canola stocks/use at 7.4%, the lowest since 2016. World canola stocks have been nearly cut in half over the last two crop years.
- Canola futures are trading in Canada and Europe, with spot ICE canola finding new seasonal highs this morning. Tightening global vegetable oil markets mandate a slowing of demand until large oilseed crops are made in 2021.
- US weekly corn and wheat export sales were within expectations, while soybean sales were a bit weaker than anticipated. Corn sales through the week ending Nov 26 totalled 54 million bu, vs. 66 million the previous week. An average weekly pace of just 37 million is needed to hit the USDA’s target. We expect corn sales next Thursday to total 45-55 million bu. Wheat sales totalled 16 million bu, vs. 29 million the previous week. US white wheat export commitments now account for 93% of the USDA’s forecast, which clearly needs to be raised 30-40 million bu. The overall pace of US wheat exports remains slightly above what is needed to validate the USDA’s forecast. Soybean sales were a meagre 15 million bu but China’s absence was known by the market pace. Soy sales need to average just 9 million bu per week to hit the USDA’s target, while China is rumoured to be returning for its pre-Lunar New Year needs.
- Finally, we note that China last week secured another 11 million bu of US sorghum, bringing total US sorghum export commitments to 178 million bu, or 69% of the USDA’s forecast with a full 39 weeks left in the crop year. Elevated sorghum cash prices are required to encourage expansion. Corn feed use across the Plains will be enlarged.
- The 10-day S American forecast is drier in Argentina and far Southern Brazil but wetter in Mato Grosso and Mato Grosso do Sul. Near daily showers will be featured across Central Brazil all of next week. Cumulative rainfall of 2-4″ will stabilise vegetation health there. Yet, rainfall across Mato Grosso and the North becomes more erratic and scattered in nature beyond Dec 13. Confidence in details so far is low but above normal rainfall is required to maintain trend soy yield potential in C Brazil. La Niña-based dryness in Argentina remains a concern.
- Our row crop outlook remains bullish. Establishing the next leg up will take time, but amid probable sizeable yield loss in Argentina, rationing soy will be difficult as crush markets rally. The loss of Argentine corn supply will flood the US market with additional export demand beginning in late winter.