- HEADLINES: Charts break down in soybeans/meal; Corn falls to two month low; Argentina to try another soybean US dollar sale in December.
- Chicago grain futures are sharply lower at midday with soymeal/soybean futures leading the decline. The USDA did not provide any bullish input for fund managers that are long on seasonal considerations, and prices are declining today on the improving S American weather forecast and tired demand for US corn/wheat. China will still use breaks to finish covering LH December and FH January import needs, but the export window for US soybeans is narrowing. We see key support as resting at $6.40-6.50 basis December corn and under $14.00 in January soybeans. Wheat will all depend on what Russia decides in terms of keeping the Ukraine export corridor open.
- Chicago brokers estimate that managed money has sold 3,700 contracts of wheat, 9,200 contracts of corn, and 8,700 contracts of soybeans. In the products, funds have sold 7,800 contracts of soymeal and bought 4,000 contracts of soyoil.
- FGIS reported that for the week ending November 3, the US sold 11.8 million bu of wheat, 10.4 million bu of corn, and 29.2 million bu of soybeans. The US corn sales during the month of November was one of the lowest of the past decade. US soymeal sales were 170,200 mt with soyoil sales of just 2,700 mt. US soyoil sales are resting at historical lows due to the massive 19-21 cent premium of US Gulf soyoil to S American offers.
- For their respective crop years to date, the US has sold 459 million bu of wheat (down 29 million or 6%), 580 million bu of corn (down 683 million or 54% from last year), and 1,216 million bu of soybeans (down 5 million or 3%). The US corn export pace is falling woefully behind the USDA annual export target and sharp reductions in US corn exports appear to be assured. Brazilian, Ukraine and Argentine corn are all offered well below the US Gulf through early 2023.
- Rumours abound that Argentina is looking at a second soybean US dollar export program that could start as early as December. The last program allowed farmers to sell soybeans at a discounted Peso rate. The Argentine Central Bank is said to be needing hard currency (US dollars) at an alarming rate which is pushing the Government to consider a second currency subsidy export program. The last soybean dollar export program was highly successful with as many as 65 cargoes of soybeans sold into the world market. China was the big buyer of the Argentine cargoes. And the program could also include corn according to multinational exporters. This would add pressure to US corn exports. An announcement could come as early as the last week of November.
- The midday S American weather forecast maintains a wet forecast for most of Brazil and Argentina for the next 2 weeks with rainfall totals of 1-3.50”. The moisture will be timely with high temperatures ranging from the 80’s to lower 90’s. Brazilian and Argentine farmers are accelerating their spring seeding ahead of the rain. Notice that the northward moving jet stream will allow for improved Argentine rainfall starting this weekend. No lasting bouts of extreme heat are foreseen.
- Chicago values are sharply lower on improved S American weather, concern that Russia will approve another 120 days of export operations of the Ukraine corridor, with Argentina offering round 2 of soybean dollar trade to boost farm sales. The US Government will be closed on Friday for the Veterans Day Holiday, which will limit market participation ahead of the weekend. The meal/soybean markets have broken down on the charts with the US Thanksgiving Day Holiday just two weeks away. The seasonal harvest rally appears to have prematurely ended with adverse S American weather needed to spur a recovery to the recent highs. We hold a mildly bearish stance.