- HEADLINES: Wheat soars as rumours that Russia hit a private cargo ship in Odessa oblast port; Soymeal bulls look for big sales tomorrow; Estimates suggest lower Brazilian soy crop at 156 million mt.
- Soybean/soymeal futures pushed to new rally highs while the grain markets played catch up. The USDA November Crop Report will be released tomorrow. And Brazil’s CONAB will update their 2023/24 corn, soybean, and wheat crop estimates beforehand. We doubt that the USDA data produces statistical fireworks with the trade looking for yield forecasts that are like October. Also, we do not expect that WASDE will make any big downward adjustments on US exports with demand improving and Brazilian weather threatening. Moreover, note that historically, WASDE does not update S American corn/soy crops sizes until December. It is early to adjust Brazilian corn/soy yield estimates downward. However, WASDE should cut Brazilian/Argentine wheat crop estimates due to both drought and flooding. Yet, if there is a bullish balance sheet tomorrow it should be soyoil as carry in stocks are cut by 160 million pounds and WASDE holds the 2023/24 crush pace steady. We see soyoil and oil share as being too cheap relative to demand. But the soyoil chart stays buried in a bearish trend which keeps money managers in a mode of selling rallies.
- Chicago brokers estimate that funds have bought 8,400 contracts of Chicago wheat, 9,100 contracts of corn, and 6,200 contracts of soybeans. In the products, funds have sold 1,100 contracts of soyoil while buying 4,800 contracts of meal.
- The USDA confirmed the sale of 565,000 mt of US soybeans to China and unknown destinations in the 2023/24 crop year with 344,500 mt of soybeans received in the reporting period for delivery to unknown destinations. The combined total is 909,000 mt making recent day sales the largest in months. The shipping period is said to be from December through March. We understand that China is still asking for US February/March soybean offers today. Also, USDA reported that Mexico purchased 270,000 mt of corn for delivery in 2023/24.
- Illinois rail soymeal is bid at $10 over Chicago December futures and offered at $19 over, unchanged. There are rumours that weekly US soymeal sales will again fail to match the expectations of the bulls with Brazilian hi pro meal being far cheaper. US Gulf 46.5% protein meal is offered at $55 over vs Brazilian hi pro (48%) at $23 over, a $32/mt difference. And Argentine soymeal is offered at $46 over, a few dollars cheaper than prior days. With cash meal at $30 over to feeders in Iowa/IL and the Plains, a price near $500 is causing nutritionists to look at using more corn or DDGs/canola or cottonseed hulls due to pricing. Soymeal prices are doing their job of rationing.
- The other extreme is soyoil in which the cash market is firming today with the Illinois rail trading at $0.05 over Chicago which is up a half to 1 cent from yesterday on improving demand. We hear that biodiesel and renewable diesel producers are active in adding to cash forward coverage on margin. Renewable diesel producers can lock down profitable margins into mid-2024.
- The Rosario Commodity Exchange lowered their Argentine wheat crop estimate to 13.5 million mt, just 2 million above last year’s crop that was 11.5 million mt. The exchange estimated that corn seeding is 27% and soybean seeding 11% completed, well behind historical averages as producers await additional rain.
- There are cash exporter rumours that Russia has struck a commercial ship in Yuzhne (Odessa Oblast port). The ship is said to be carrying grain or iron ore according to the rumours. If Russia intentionally struck a private cargo ship it would usher in new layer of worry for marine insurance carriers.
- The GFS weather forecast is dry with virtually no rain across Northern and Central Brazil into November 20. The lack of rain is startling farmers with seed germination suffering. High temperatures will hold in the 90s/lower 100’s. Such temperatures are some 5-9 degrees above normal which is adding to the soil moisture losses.
- Estimates are cutting Brazilian soy crop estimate to 156 million mt and corn to 123.5 million mt. Brazilian weather will be alarming in another few weeks if the pattern does not change. It is S American weather that directs Chicago prices. The midday GFS forecast is wetter in the 11–15-day period which is a long way off, but must be closely followed.