- Chicago is sharply higher at midday. Corn and the soy complex have scored new contract highs with the wheat market reversing overnight losses on fresh buying. The holiday looms, but based on the volume at the Chicago, few would imagine that Christmas is just 36-48 hours away. Chicago volume is active today on a need for soy demand rationing and what lies ahead after the long holiday weekend. Key for next week’s trade will be S American weather, Chinese demand and the ongoing need for the rationing of US soybean demand. Hopefully, Thursday’s session (Christmas Eve Day) will be less active. A profit taking turnaround is expected tomorrow.
- Chicago brokers estimate that fund managers have bought; 7,000 contracts of corn, 7,000 contracts of soybeans, and 6,600 contracts of wheat. In soy products, funds have booked 3,200 contracts of soymeal and 4,000 contracts of soyoil. Fund managers are on the buy side of the marketplace all morning long. There just is not much for sale above the market, however the fund buying is slowing at midday which could produce a correction near the close.
- FAS/USDA did not announce any new daily sales of corn, wheat, soybeans, or soy products today.
- US Weekly Export Inspections for the week ending December 17 were 14.5 million bu of wheat, 25.6 million bu of corn, and 13.0 million bu of soybeans. The weekly soybean sales were a marketing year low. The diminished sales totals were widely expected, but US soyoil sales were a solid 20,900 mt with meal at 233,700 mt. The ongoing US soy product export sales helps maintain the US crush rate and prevent demand rationing from this sector. China booked another 500,000 plus mt of US soybeans last week. We now estimate that China has secured 35.5 million mt of US soybeans in 2020/21 on their way to taking 40 million.
- China booked another 2-3 cargoes of US soybeans this morning off the PNW for February, which helps confirm talk that China looks to roll 1-1.5 million mt of February purchases to the US due to late seeding dates. We are also hearing that China continues to seek new crop US cargoes, quietly.
- For their respective crop years to date, the US has sold 736 million bu of wheat (up 55 million or 8% from last year), 1,663 million bu of corn (up 961 million or 137%), and 1,990 million bu of soybeans. The US has sold a record 90.5% of their annual export estimate, which we believe is far too low. WASDE needs to raise their 2020/21 US soybean export estimate by some 150-200 million bu with corn up 50-100 million bu. The increasing US export sales position makes it difficult for the January USDA crop report to be bearish.
- For the first time, the price of wheat and corn within China are the same. Dalian corn and domestic wheat are both around $10.40/bu. This may be based on China’s elevated auction of old wheat stocks, but the Government sales have not pressured corn. Dalian May corn closed at $10.33 overnight.
- The midday is wet for Argentina. The model indicates 0.50-2.00″ of rain early next week. However, a new drying trend is noted for Central and Northern Brazil. The below normal weather trend for N and C Brazil is worrisome with soy in its reproductive stage. 1-3.00″ of rain will drop across N and C Brazil during the holiday weekend, before the drying trend develops. The long-range forecast holds this dryness into mid-January.
- The Chicago rally is based on the acute need for US soybean demand rationing. Current prices are now accomplishing that feat. In Argentina, labour unions and the port authorities will talk this afternoon, but a settlement is not expected. Workers are demanding to be paid at the Blue Peso rate, a wage increase of 80%. We hold a bullish stance, but a Chicago correction could unfold early next week for a new buying opportunity. Any $0.15-0.25 cent decline in soybeans and $0.05-0.10/bu in corn is a buying opportunity in our view.