- HEADLINES: Early day Chicago rally fades on “Sell the Fact” profit taking; Traders doubt that US corn/soybean sales pace to persists; GFS weather forecast favourable for S America.
- Chicago ag markets are mixed at midday with “sell-the-fact” trading pressuring values from an initial higher opening. US corn, soybean, and wheat export sales for the week ending October 17 were large, 142 million bu of corn, 79 million bu of soybeans, and 20 million bu of wheat for a combined 241 million bu, one of the largest total 3 grain sales in years.
- However, the big sales were anticipated through daily announcements, but the sheer size of the weekly sales produced initial short covering with December corn reaching $4.24, November soybeans $10.12 and December Chicago wheat at $5.84.
- We note that based on additional export sales this week, that next week’s USDA sales report will reflect new US corn sales of more than 80 million bu with soybean sales being north of 50 million bu. It appears that world importers see price/politics as right for taking forward coverage. The thought is that world importers want to get purchases on the books before there is any chance that punitive tariffs could be applied. Mexico (67 million bu) and unknown destinations (45 million bu) are the primary buyers of US corn while China booked 48 million bu of US soybeans. Mexico has now purchased 10 million mt of US corn with another estimated 2-2.5 million mt carried in unknown taking total purchases to 12-12.5 million mt.
- US soybean sales to China have grown to 10.4 million mt with another 3-3.25 million mt likely held in the unknown destination category. We expect that China will switch at least 4 million mt of US soybean sales to Brazil during the 2024/25 crop year which means that total US soybean exports could fall 75-150 million bu on the year depending on price spreads between the US and S America this winter. Our current forecast is for a decline of 75 million bu of US soybean exports.
- FAS/USDA confirmed the sale of 227,600 mt of US corn to Japan and 165,000 mt of corn to an unknown destination. There were 198,000 mt of US soybeans sold to an unknown destination for the 2024/25 marketing year. The big question that traders are pondering is whether the purchase flurry for US corn and soybeans is nearing an end with the US election just 11 days away.
- The midday GFS weather forecast is unchanged from its morning release, with a favourable mixture of rain/sunshine for the next 10 days. Needed rain has fallen across Argentina/S Brazil which is shifting north. Deral in Parana has raised their soy yield estimate due to favourable weather. A few dry pockets remain across Southern Mato Grosso, but the forecast is favourable for S American yield potential. We maintain that subsoil moisture reserves will return to normal or above normal across S America in the next 2-3 weeks. Near-term crop weather threats are absent.
- US export demand and short covering of sellers last week has lifted Chicago futures. However, will the bulls be willing to carry their long positions into the November 5 US election. We see price pressure returning on Friday and lingering next week. S American weather stays favourable with US corn, soybean ,and wheat stocks abundant with the US corn yield expected to rise in the November WASDE. Brazilian corn offers are cheaper than the US for November/FH December and the US corn sales pace is forecast to slow.