- Today has seen Chicago markets led by soybeans, which are trading higher, retesting the post-harvest rally high at $10.20 basis the Jan ’17 contract. That high was posted prior to the USDA’s hike in yield to the record 52.5 bushels/acre in their November report. Crude oil has also gained sharply adding support to commodity markets and has provided some bullish momentum in reduced volume pre-holiday (Thanksgiving) trade. It should be noted that Jan ’17 soybean futures have pushed above the 100 day moving average, a potential trigger for additional buying. The grains have followed but in a more subdued manner.
- The US Thanksgiving holiday frequently provides a bullish momentum and our current feeling is that we should let this run its course as there is no fundamental driver to support a significant move higher at this moment in time. We understand that Chinese soybean purchasing is in the process of switching to Brazil although we have no hard evidence to back this up today. S American farmer selling in the cash market will likely see a solid price cap emerge and limit gains. The grains appear to have limited upside for now.
- It seems that there are fund managers around who are willing to dispute and disbelieve the USDA’s huge US soybean carryout figure and global end stocks number. Whether they are right, or wrong, will doubtless be proven one way or the other in the fullness of time! S American weather forecasts are in good agreement right now with normal weather prevailing. A strong jet stream is producing good showers/storms across N and C Brazil whilst drier conditions are scheduled for S Brazil and Argentina in the coming ten days. There are no extremes of heat forecast and Brazilian and Argentine crops appear to be heading for a good start to the season. The one minor concern is that Argentina looks as if it will trend drier in the 10-15 day period and this needs to be monitored; initially it will benefit seeding and fieldwork as soil moisture levels are adequate, but concern would rise if dryness continued into mid-December.