- HEADLINES: Soyoil export sales massive; Iraq seeks wheat; Extreme heat probable in Argentina.
- Chicago futures have turned higher at midday in thin holiday-reduced volume. Increasingly, markets cannot ignore stagnant S American weather forecasts, which most likely stay unchanged through the long weekend. We have previously highlighted the development of heat in Argentina and Southern Brazil, where high temperatures will be consistently in the mid/upper 90s or higher, which will accelerate soil moisture loss into early Jan. Brazilian corn for March delivery has rallied to $7.22 per bushel, a new 4-month high, while palm oil and minor vegoil markets surge this week. It is just tough to find bearish fundamental input.
- US corn sales through the week ending Dec 16 totalled 39 million bu, vs. 77 million the previous week. Wheat sales totalled 15 million bu, vs. 24 million the previous week. Soybean sales were 30 million bu, vs. 48 million the prior week. All were broadly within trade expectations, but the details of FAS’s weekly report lean supportive. China secured another 16 million bu of US sorghum, bringing total US sorghum to sales to China to 151 million bu. Canada through Dec 16 has purchased a record 110 million bu of US corn.
- We would note that Canadian corn purchases from the US now account for 93% of the USDA’s annual Canadian import forecast. USDA must raise Canadian corn imports by 500,000 plus mt, which will raise total world corn trade.
- US soybean oil export sales were a massive 241 million lbs, the largest for any week since 2010. US soyoil sales to India were known by the marketplace, but soyoil sales to non-Indian destinations were an impressive 125 million lbs. US meal sales were 300,000 tons, a level that has only been exceeded 6 times in history. Total 2021/22 US soy export commitments now sit at 76% of the USDA’s forecast with a full 41 weeks remaining in the crop year. US soy crush must be maximised amid rising product demand, but whether crush capacity in excess of 2,200 million bu exists is unknown. US soyoil stocks will be trending downward.
- Iraq has tendered for a nominal 50,000 mt of US and/or Canadian origin wheat. We look for Iraq to ultimately purchase 300-500,000 mt, and neither the US nor Canadian balance sheets can afford a period of sustained enlarged export demand. The USDA’s Mid-East 2021/22 wheat import forecast is still 2-3 million mt too low. US export input today is positive.
- Operational weather models have extended a pattern of complete dryness across TX, OK, KS and CO into Jan 7, with temperatures there to stay 7-15 degrees above normal over the next 10 days. This week’s drought monitor featured another expansion in dryness across the principal HRW Belt, with important sections of TX, W OK and E CO now experiencing severe to extreme drought.
- Spot WTI crude at midday is up $0.90/barrel at $73.65 and has rallied $7.50 from Monday’s low. March Paris milling wheat is down €2.25/mt at the time of writing . Spot EU rapeseed continues to soar and at midday sits at a new record high €756.50/mt ($857/mt). EU rapeseed’s premium to spot Chicago soybeans has widened to 78%. It is clear there remains global rapeseed/rapeseed oil supply issues, which bodes favourably for continued US soyoil export demand.
- The midday GFS weather forecast is wetter in Southern Brazil Jan 5-7 but confidence so far out is low. Additionally, the midday Canadian model does not support this change and instead lasting warmth and dryness is most probable in Argentina and Southern Brazil throughout the next two weeks. The GFS’s 10-day forecast is little changed with near complete dryness to be ongoing in Argentina/S Brazil through the period. Rapid soil moisture loss will continue. Northern Brazilian crop areas enjoy continued above-normal rainfall and near-normal temperatures.
- Changeable S American forecasts are possible over the long weekend but breaks into mid-winter will be only corrective in nature. The bigger risk is that forecasts do not change, and that S American corn and soy production will be trimmed more rapidly by the trade in early Jan.