- HEADLINES: Chicago sags in corn on lacklustre export demand; EPA says RVO mandates out before weekend; Some additional falls in Argentina.
- Chicago values at midday are mixed at midday with an early rally effort failing. Soybean futures pushed to the best levels since September with the January rally to $14.785 while March corn has been unable to rise above key resistance at $6.80-6.85. The corn market appears to be forming a bear flat on the charts with the WASDE December 9 crop report expected to lower US 2022/23 corn exports by 50-150 million bu. Amid favourable Brazilian weather forecasts and some rain for Argentina (more needed) the market is at prices that by our analysis are overvalued.
- EPA has stated that it will release its biofuel mandate for 2023 by the end of the week. No exact timeframe has been provided for today or tomorrow which is making for anxious biofuel traders. EPA has announced that electric vehicles are eligible for renewable fuel credits which is one of the largest changes in the program. The trade is expecting growth in the RVO mandates due to Biden’s green lean on fuel. However, traders are waiting for the specifics.
- Chicago brokers estimate that managed money has bought 2,100 contracts of wheat and 5,800 contracts of soybeans, while selling 3,900 contracts of corn. In soymeal, funds have bought 4,300 contracts of soymeal while selling 2,200 contracts of soyoil. Soyoil/meal spreads are being unwound following ADM’s unexpectedly delivered soyoil causing worry that cash basis levels are weaker than being reported by the media.
- EIA reported that US ethanol production reached 299 million gallons last week vs 306 million the prior week. The production was down 2% from last year and needs to reach 295 million gallons per week average to achieve the USDA annual target. US weekly gasoline consumption was down 5% from last year at 8.32 million barrels per day. It is the slowing US gasoline consumption rate that spells future worry for US corn grind demand.
- Rains are falling across Santa Fe and Buenos Aires at midday with additional morning totals of 0.25-0.75%. The midday GFS weather forecast is consistent with prior runs that rains across Brazil are near to above normal while Argentina holds in a drier flow pattern for the next 7-8 days. Argentina will endure intermittent heat of 90’s to low 100’s early next week with Brazil seeing highs in the 80’s/90’s. The Brazilian outlook remains nearly ideal. Moisture will be replenished across the drier areas of Mato Grosso and RGDS with time.
- Soymeal is not going to bull the soybean market as supplies are adequate and cash basis levels leak lower amid the record US crush total. US corn, soybean and wheat export demand stays slow which adds to end stocks with the passage of time. USDA will adjust US corn exports lower on December 9 with end stocks to rise a like amount. Interestingly, wheat values hold limited downside price potential due to stable Russian fob wheat offers. China has bought 4-5 cargoes of Argentine soybeans for late December/January this morning.