- HEADLINES: Grains slide; Soy adds premium following morning export sales; US$ breaches chart support.
- Chicago ag markets are mixed at midday as soy adds modest premium following a tranche of sales made to China, Mexico, and unknown destinations. The wheat market battles a stagnant European market, aggressive Russian fob offers, which show no sign of ending, against firm Aussie values and probable Plains drought expansion into the winter months. Much more pressure is being placed upon spring rainfall across the principal US HRW Belt. The Dec KC-Chicago wheat spread this morning has reach a newer contract high $1.16/bu.
- Wheat stays tied to geopolitics, namely next week’s G20 meeting, which Ukrainian President Zelensky will take part in, following by the decisions on renewing the Black Sea export corridor on Nov 18. Turkey has proposed extended the deal by a full year, rather than 120-day increments, but the reality of Black Sea grain flows remains in Putin’s hands. Key will be whether Russia is offered improved banking conditions in exchange for grain/fertiliser.
- Macro input leans positive. The US$ is down 0.8% and fallen below initial chart-based support and the Dow up 375 points as financial markets bet on a split US congress and a slowing of fiscal stimulus.
- Yet, international markets have adjusted to currency changes on a near daily basis. Spot Brazilian corn has stagnated at $6.90-7.10/bu. Paris milling wheat futures are down slightly in US$ terms this week. Weakness in the dollar index, on balance, is not aiding the position of US wheat and corn in the world marketplace.
- US exporters sold 414,700 mt of soybeans to China, Mexico and unknown destinations, and 338,600 mt of corn to Mexico, all for 2022/23 delivery. Mexican corn demand is desperately needed as total export commitments sit a worrisome 53% below last year as of late October. Soy export demand remains on track to meet the USDA’s forecast, and changes to the US soy balance sheet on Wednesday hinge entirely on yield adjustments. Corn exports in 2022/23 are fully expected to be lowered 100 million bu.
- Short-term moisture deficits in Argentina will be eased considerably next week and will be erased completely in small but important regions of La Pampa and Cordoba. The sheer intensity of coming Argentine rainfall is a surprise given La Niña’s modest strengthening since mid-October. More than enough rain will fall to satisfy early season moisture demands.
- The S American GFS weather forecast maintains cumulative rainfall in Argentina of 1-3” Nov 11-14, with a pattern of soaking rain to resumes across all but southern Mato Grosso and Rio Grande do Sul in Brazil. If the forecast verifies, Nov 1-20 rainfall in Central Argentina will be 90-125% of normal. The replenishment of soil moisture in Central Brazil has been more sluggish that anticipated but forward guidance lacks threats moving forward. Soy replanting will be needed in far S Brazil following recent frosty temperatures, but this region does not produce safrinha corn, and so planting dates there are less of a concern.
- Seasonal trends are broadly positive but the massive addition of premium in 2021 and 2022 has been based on real fear of shortages. This fear is being diminished by improving S American weather and Russia’s ongoing contribution to world wheat trade.