Author Archives: simon

28 October 2024

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  • HEADLINES: Chicago wheat recovery flounders; Crude stays Weak; Fresh input lacking
  • US wheat futures were unable to sustain early morning gains and otherwise world ag markets have done little at midday. Weakness in crude acts as a wet blanket on the ag space, and enthusiasm for new positions ahead of next Tuesday’s US election is lacking. Lingering in the background is an outright wet forecast in central and northern Brazil and the growing likelihood that drought in the US is eased across the far E Plains, Midwest, and mid-South. The midday GFS weather forecast is more expansive with rainfall of 1-3” next week, and this rain is projected to be spread across the E Plains and entirety of the Midwest, TN, and KY .
  • US exporters this morning sold 244,000 mt of corn to Japan and unknown destinations. No soybean sales were announced. 
  • US corn inspected for export in the week ending Oct 24 totalled 32 million bu, vs. 39 million the previous week and vs. 22 million in the same week a year ago. Soybean inspections totalled 88 million bu, vs. 94 million the previous week and vs. 75 million a year ago, though we do note that the US’s soy export program very often peaks between mid- and late October.
  • Wheat inspections totalled just 9 million bu, vs. 10 million the previous week.
  • For their respective marketing years to date, the US has inspected for export 261 million bu of corn, up 33% year-on-year, 382 million bu of soybeans, up 2%, and 349 million bu of wheat, up 34% from late Oct 2023. Pace analysis implies USDA will leave its corn, wheat, and soy export forecasts unchanged in its November WASDE, but the rate at which soy sales/shipments decline must be watched closely. Our concern is that US soy exports will be trimmed 25-75 million bu after January barring adverse Brazilian weather.
  • Russian wheat fob quotes are down slightly again, with spot wheat buyable at/below $235/mt. The wheat market, including within Russia, has shrugged off the government’s recommended floor price of $250/mt for hi-pro milling sales, but an Egyptian tender is really needed to judge just exactly where Russian wheat fits into the global marketplace for delivery in December and beyond. EU, US, and Australian markets recently have been left to wait for price movement in Russia, and for now must battle for non-traditional export demand. Russian wheat exports are expected to end October at 5.4-5.5 million mt, a record for the month. E Australia’s spot wheat futures are down $0.03/bu at $5.84, a newer 8-week low.
  • WTI crude is stuck down $4.00/barrel at $67.70. Key support lies at $66.30. The Dow at midday is up 270 points.
  • The GFS weather forecast in S America is drier in N Argentina, but wetter in Buenos Aires and wetter in Mato Grosso. A rather normal S American climate is forecast through the first full week of November. We note there remains doubt in the climate community with regard to the speed of La Niña development, and for now cooler than normal equatorial Pacific temperatures don’t appear to be negatively impacting conditions in Argentina and far Southern Brazil. Extreme heat stays absent into Nov 12.
  • Chicago corn and wheat’s recent failure at chart-based resistance is noted, and Jan soybean’s lacklustre performance at its 20-day moving are noteworthy. We do note wheat and soy are again approaching oversold technical conditions.

25 October 2024

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  • HEADLINES: Chicago weaker at midday; Breaking news absent; S American forecast stays favourable into Nov 8.
  • Chicago ag markets are weaker at midday, still led by wheat amid sagging Russian fob offers and as spot Paris milling wheat tests chart-based support near €215/mt. Russian wheat appears buyable for very nearby delivery at $237/mt, vs. the government’s recommended floor price of $250. Paris milling wheat since Oct 9 has dropped €18/mt (7.5%) and fills an open chart gap at €210. Despite lower Black Sea wheat production and stocks, non-Russian exporters are still left fighting for market share. Corn and soy have followed amid a lack of breaking news and the absence of short-term S American weather threats.
  • Exporters this morning sold another 136,000 mt of corn to Mexico and 116,000 mt of soybeans to China. But as previously mentioned, US Gulf corn is no longer the clear cheapest origin, and competition from Ukraine returns above $4.20, basis December Chicago. Corn has ebbed and flowed along with its position in the world market. There is just not much for bulls to sink their teeth into this morning.
  • The last big harvest weekend of the year lies ahead. Zero rain is forecast other than light/scattered chances across the far E Midwest. We expect the US corn harvest on Sunday to reach 80-82% complete, vs. 65% last week, and soy harvesting to be 90-92% complete, vs. 81% last week. Supply pressure fades thereafter, but spot corn bids, for delivery next week, remain deflated.
  • NASS on Monday will release its first 2025/26 winter wheat crop condition. We expect good/excellent ratings nationally to be 46-50%, vs. 47% last year and 51% on average. There is no doubt a need for heavy late autumn/winter precipitation to ease rapidly developing drought across the Plains, but s work strongly suggests autumn crop ratings correlate only with future abandonment. Nov crop health does little to foreshadow winter wheat yield potential.
  • A pattern shift looms across the Midwest/mid-South, as all models agree rainfall of 1-3” blankets the E Plains, MO, IA, IL, WI, and pockets of IN & MI in the 6–15-day period. This rain is viewed as rather timely. Row crop harvesting nears completion, as does Midwest winter wheat seeding in early November. Mississippi River levels are due to stabilise.
  • Spot WTI crude is up $1.45 at $71.70/barrel as Mid-East (Israel/Iran) tension lingers in the background. The Dow is down 75 points. The US dollar index keeps intact its short-term uptrend line is slightly firmer at midday.
  • The midday GFS weather forecast is unchanged from the morning. S American rainfall into the weekend will be confined to central Brazil, where additional rainfall of 1-2” is offered to southern Mato Grosso, Goias and Minas Gerais. A more expansive pattern of Brazilian returns next week, and all but RGDS in the far south face additional improvement in subsoil moisture. A drier trend emerges in Argentina into Nov 10, which will be monitored amid lingering calls for a weak La Niña, but following rainfall this week in Argentina worth 2-5” any real crop concerns have been pushed back to late Nov/early Dec.
  • Bull trends struggle amid large existing US supplies, favourable S American weather and as US corn loses its monopoly on world trade on rallies. Be prepared for additional choppiness ahead of the US election.

To download our weekly update as a PDF file please click on the link below:

Weekend Summary 25 October 2024

 

24 October 2024

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  • 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.

23 October 2024

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  • Chicago recovers; Ethanol production growth continues; Equity, energy markets sag on rising bond yields.
  • Chicago ag markets are higher at midday as corn trades through initial resistance, wheat attempts to test its 20-day moving average and as nearby US export demand remains intact. Exporters this morning sold another 389,000 mt of soybeans to China and unknown destinations and another 100,000 mt of corn to unknown. This brings total US corn sales on a known basis since Oct 10 to 131 million bu, and 219 million since Oct 4, and corn/soy export sales this and next Thursday will be large. Today it is meal that is boosting futures-based soy crush margins. Long term risks are bearish without threatening S American weather in Dec-Jan, but the uncertainty surrounding the US Presidential election and the US’s competitive position in row crop markets for autumn/early winter delivery have triggered support on corrections.
  • Cumulative Sep 1-Oct 18 ethanol production is calculated at 2.15 billion gallons, up 3% from 2023. USDA in its Oct WASDE forecast ethanol’s corn demand draw in 2024/25 to decline slightly.
  • Ethanol stocks last Friday were 934 million gallons, down slightly week-on-week as stable domestic use and improved exports offset production gains. Residual ethanol disappearance, the best proxy for exports, since January is up 11% on last year. The Brazilian fob ethanol market remains at/above US Gulf values, which is unusual for October. Ethanol production margins are decent. A seasonal peak in corn grind isn’t anticipated in mid-December.
  • Macro input leans a bit negative. Spot WTI crude is down $1.10/barrel at $70.60. US crude stocks continue to build seasonally, with stocks on Oct 18 up 1% on last year at 426 million barrels. Treasury yields continue to climb, as does the US dollar, and the Dow at midday is down 390 points, as the bond market becomes more pessimistic with respect to additional rate cuts through the balance of 2024. Importantly, the Brazilian Real today has scored a newer two-month low, and this along with Chicago soy’s recovery aids future Brazilian producer profitability.
  • US ethanol production, too, continues to expand year-on-year. Production in the week ending Oct 18 totalled 318 million gallons, vs. 306 million the previous week, up 4% on last year and the second largest on record for this particular week.
  • The midday GFS weather forecast is unchanged from its morning release, with a nice mix of rain/sun projected over the next 10 days in both Brazil and Argentina. Heavy showers linger in Argentina for another 24 hours. Heavy totals of 1.0-2.5” are offered to the drier areas of Buenos Aires. Rain in N Brazil stays light/scattered in nature through Friday, after which better organised events occur on a near-daily basis. We maintain that subsoil moisture reserves will be established S America-wide in the next 2-3 weeks. Near-term threats are absent.
  • Harvest pressure begins to fade seasonally. Offsetting near ideal S American weather in the short run is the US’s monopoly on Nov-Dec soy trade, while the soy-corn ratio is projected to narrow further amid sizeable US corn disappearance, in both the industrial and export markets.

22 October 2024

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  • Chicago pushes higher on big fund demand in corn; Political polls being discussed; Sizeable rain for N Brazil.
  • Chicago corn, soybean and wheat futures are higher at midday. Buying emerged at the morning reopening and it persisted into the midday hour. December corn futures powered up to $4.13-4.16 chart resistance and November soybean futures to $9.95-10.00. The morning rally has been paced by soyoil with December futures pushing up to $0.44-0.45 resistance. And finally, December Chicago wheat futures held support at $5.65 and rallied. Last week it was “student body” right (Trump) and this week it’s “student body” left (Harris).
  • Grain futures declined last week as it appeared that former US President Trump was surging in the polls. However, the weekend and early polls showed that Harris has regained lost polling ground. We would note that political polls are often unreliable, but their importance to Chicago grain values should not be understated in terms of ag trade or green fuels. The subtle shift in the polls back to Harris has funds buying soyoil on the hope that she maintains a strong US green fuel subsidy program.  The coming US election looms large in the minds of traders, and we are sure that a few additional back and forth in the polling results looms.
  • Chicago brokers estimate that the managed money has bought 4,100 contracts of Chicago wheat, 12,400 contracts of corn, and 6,700 contracts of soybeans. Managed money has bought 5,300 contracts of soyoil and sold 1,600 contracts of soymeal.
  • FAS/USDA reported the sale of 359,500 mt of US corn to Mexico for the 2024/25 crop year.
  • We would mention that we did not envision the Chicago November/January soybean spread pushing much above $0.07 or December/March corn spread much above $0.11/bu on record large US corn and soybean stocks as of November 1. Cash basis bids are firming on US farmer cash sales reluctance as he pushes ahead with the 2024 harvest. However, on farm storage is quickly filling and the last 10% of the US soybean and 20% of the corn harvest may be sold on basis contracts or pushed across the scales. One thing that US farmers are waiting for is the calculation of revenue insurance price off October Chicago corn and soybean futures. Depending on yield, farmers may or may not being seeing a payment, and they are less willing to sell grain until they know.
  • The IMF raised the 2024 US economic growth forecast to 2.8% on better consumer demand and a brighter jobs outlook with 2025 at 2.2%. However, the IMF cut China’s 2024 economic growth forecast to 4.8% with 2025 forecast at 4.5%. In other words, China’s economic growth will continue to fade. 2025 Global economic growth is forecast at 3.2%, the same as 2024. However, trade and geopolitical risks are rising amid 2 wars and new protectionist trade policies
  • A favourable mixture of rain/sunshine prevails across Brazil/Argentina for the next 10 days. Northern Brazil will see daily showers of 0.25-1.25” to restore soil moisture. EC Brazil is favoured with any heavier rainfall. Key growing regions of Mato Grosso received 1-4.00” of rainfall overnight helping to more fully replace lost subsoil. Brazilian high temperatures will range from the 80’s to the low 90’s. The Argentine forecast is also favourable with rain to return Wednesday with totals of 0.5-3.00” followed by 5-7 days of dry weather before new shower chances return. No extreme heat is forecast with highs in the 70’s to the upper 80’s.
  • Yesterday, we suggested that a weekly high should be scored early today. It is doubtful that US corn/soy/wheat prices can sustain an uptrend amid favourable S American weather and a seasonal slowdown in China’s purchase program of corn/soybeans. China has yet to secure any world wheat with the midpoint of the crop year noted in November. US daily export sales are expected to slow for the remainder of the week, while Brazil is well behind in its corn sales pace. Corn has nearly retraced 50% of its recent decline while Dec/March corn and Nov/January soybean spreads near a seasonal high at 13.0 and 7.0 cents, respectively.

21 October 2024

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  • Chicago holds onto gains at midday; Brazilian Real slides near record low vs USD; US soybean weekly exports nearing their seasonal high.
  • Midday Chicago corn, soybeans, and wheat futures are slightly higher with corn the upside leader on additional US/FAS daily export sales. Short covering is the week’s early feature, but the market is running into cash corn sales from Midwest farmers as December futures reach near their upside targets at $4.12-4.14. On a per acre basis, farmers are seeing incredible yields and even at $4.12 December corn, gross per acre calculations are coming in at or above producer budgeting from earlier in the spring. Amid tight storage, farmers are willing to sell corn with 20-50% of their harvest yet to be completed. The fast harvest pace and large yields are providing strain to US logistics and storage across most of the Midwest. Corn piles are starting and growing, something that has not been seen in recent years.
  • Soybean and wheat futures are rising on short covering amid a general bounce in a host of commodity markets related to the cut in China’s lending rate. It will take a long time to measure whether China’s 0.25% reduction in its lending rate will boost consumer confidence/demand. But the nearby impact of the rate cut should be digested by commodity markets by no later than Tuesday.
  • Chicago brokers estimate that the managed money has bought 3,600 contracts of Chicago wheat, 5,900 contracts of corn, and 4,100 contracts of soybeans. Managed money has bought 2,300 contracts of soyoil and 1,900 contracts of soymeal.
  • FAS/USDA reported the sale of 169,926 mt of US corn to Mexico and 130,000 mt of US corn to S Korea for 2024/25. And 198,192 mt of US corn was sold to an unknown destination, rumoured to be Mexico.  There were 116,000 mt of US soybeans sold to unknown destinations, rumoured to be the EU, and 264,000 mt of US soybeans received in the reporting period for delivery to unknown destinations that are rumoured to be China.
  • FGIS weekly export inspections for the week ending October 17 were 39.4 million bu of corn, 89.4 million bu of soybeans, and 9.9 million bu of US wheat. For their respective crop years to date, the US has exported 228 million bu of corn (up 53.3 million or 31%), 290 million bu of soybeans (down 8 million or 1%), and 340 million bu of wheat (up 86 million or 34%). The US export pace is in line with corn/wheat WASDE forecasts, but falling behind last year on soybeans is a concern.  We maintain that WASDE is 75-125 million bu too high in its US 2024/25 soybean export forecast due to slowness by China.
  • The Brazilian Real is weakening to historical lows today which provides a currency advantage for Brazilian farmers. The Real is priced at 5.71:1 USD or near a record low. The Brazilian Central Bank is expected to raise their lending rate by 1% on Friday to stem worsening inflation. The fall in value of the Brazilian Real boosts Brazilian farm profitability with soybean seeding area expansion at 3% now assured. A rise to 5.8-5.9 in the Real vs the US dollar would keep Brazilian farmers profitable on both corn and soybean seeding/production. The Brazilian government’s growing deficit is bearish of Chicago prices as grain production continues to expand.
  • A favourable mixture of rain/ sunshine prevails across Brazil/Argentina for the next 10 days. Northern Brazil will see daily showers of 0.25-1.25” to restore soil moisture. EC Brazil is favoured with any heavier rainfall and low-level flooding. Brazilian high temperatures will range from the 80’s to the low 90’s. The Argentine forecast is also favourable with rain to return mid-week with totals of 0.5-3.00” followed by 5-7 days of dry weather before new shower chances. No extreme heat is forecast with highs in the 70’s to the upper 80’s.
  • Chicago should score a weekly high by early Tuesday on short covering with farmer selling to increasingly pressure corn. S American weather forecasts are favourable which caps Nov soybeans above $9.90. And needed rain is falling across the Plains to germinate HRW wheat. Russia will export a record large 5.5 million mt of wheat during October. We doubt that wheat futures can sustain much of a rally.

18 October 2024

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  • Chicago values fall on hedge related selling and China’s absence as a US Buyer after January 1; S American weather forecast favourable for seeding.
  • Chicago corn, soybeans and wheat are weaker at midday with oil share spread unwinding lifting soymeal futures. The soyoil market has been unable to sustain a recovery amid the lack of clarity on the coming November 5 election. However, more important is the decline in US and Paris wheat futures as Russia looks to sell directly to 13 nations without foreign participation. Russia is showing a desire to become a state seller of grain which means a more opaque world wheat marketplace. We note that December Chicago wheat futures are back down against the 50-day moving average at $5.7075 with today’s price action producing a bearish reversal down. A close below $5.70 December Chicago wheat will likely produce additional fund related selling early next week. Corn and soybeans are following the wheat market lower with the bulls vastly disappointed in market action following yesterday’s recovery. Seasonal price trends are normally supportive following the US Columbus Day holiday, but Chicago valuations are not able to follow through. We look for a lower Chicago close on late day hedge related selling as this will be the last active harvest weekend across the Midwest. Farmers are finishing their corn/soy harvests and concentrating on fertilisation programs for 2025 spring seeding.
  • Chicago brokers estimate that the managed money has sold 7,300 contracts of Chicago wheat, 4,900 contracts of corn, and 4,500 contracts of soybeans. The managed money is flat in soymeal, while selling 3,100 contracts of soyoil futures.
  • FAS/USDA reported the sale of 21,000 mt of US soyoil for 2024/25, and 125,000 mt of corn to an unknown destination, and 292,800 mt of soybeans received in the reporting period for the delivery to an unknown destination.
  • US exporters report that China secured large tonnages of Brazilian soybeans for shipment from February onward this week. We count at least 42-48 cargoes of Brazilian soybeans that were sold to China through May. The fall in price triggered the Chinese demand while US soybean sales are cleaned up for December. China will not secure US soybeans or other ag products after January 1 due to the uncertainty surrounding the application of tariffs on Chinese purchases via the US November election. China has no idea who will be the 47th US president, but amid all the rhetoric of tariffs, they prefer to secure soy/ag products from others to assure price. This means that there is a de facto embargo against US ag products to China until there is certainty on who will be the 47th US President and their trade policies.
  • For the week ending October 10 the US sold 18.5 million bu of wheat, 87.6 million bu of corn, and 62.6 million bu of soybeans. The sales pushed US crop year wheat sales to 461 million bu (up 67 million or 17%) and US corn sales to 782 million bu (up 142 million or 23%, with US soybean sales up 38 million bu or 5%). We estimate that China has now secured 12.6 million mt of US soybeans including 3.5 million mt of soybeans sold to an unknown buyer. We see China taking 19.5-20.5 million mt of US soybeans in the 2024/25 crop year, down from last year’s 24.5 million.
  • A favourable mixture of rain/sunshine prevails across Brazil/Argentina for the next 10 days to advance the spring seeding. Northern Brazil will see daily rains of 0.25-1.50”. The rain is welcome to restore soil moisture. EC Brazil will be favoured with any heavier rainfall. Forecasted high temperatures will range from the mid 80’s to the middle 90’s.  The Argentine forecast is also favourable with heavy rains to return this weekend and no sign of extreme heat. First season corn seeding is active across Santa Fe, Cordoba, and Buenos Aires.
  • Chicago will not be able to sustain a rally until after the November 5 US election. Favourable S America weather along with China’s absence for US ag products (soybeans) from January onward leaves the market to edge lower into Halloween. Some faster moving hedge funds are betting that former US President Trump will be re-elected which will start another trade war with China. US farmers are looking to sell cash corn/soy on rallies. Chicago downtrends look to continue.
To download our weekly update as a PDF file please click on the link below:

17 October 2024

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  • Chicago bounces from early selling on bottom picking; Midday S American weather forecast favourable; US elections loom large for Chicago prices.
  • Chicago futures are weaker at midday with December corn briefly breaking below $4.00 chart support while January soybeans near their contract low at $9.75. Wheat futures have followed corn lower with soyoil being the only Chicago market that is showing any willingness to rally. Soybean futures have fallen $1.00/bu and corn $0.35/bu following their early October highs. The spot Chicago wheat/corn spread has pushed out to a $1.80 premium which limits further wheat rallies.
  • End user pricing and some bottom picking is noted this morning, but unless S American weather turns adverse or world demand increases (China in particular) any rally effort will be modest and limited to short covering. China has been a very slow buyer of world grain in the past 6 months and is not showing any willingness to take forward coverage into the end of the year. We maintain that the post-harvest rally occurred early in late September and early October. We look for a lower Chicago close today with additional hedge related selling occurring into the weekend. Fridays are trend days and lacklustre China demand, and bearish chart trends are likely to place new pressure on Chicago grain markets heading into the weekend.
  • Chicago brokers estimate that the managed money has sold 1,300 contracts of soybeans and 1,400 contracts of corn, and 2,900 contracts of Chicago wheat. In the products, managed money has bought 3,200 contracts of soymeal and bought a net 1,700 contracts of soyoil.
  • FAS/USDA reported the sale of 197,180 mt of US corn to Mexico and 101,000 mt of US corn to an unknown destination. No soybean sales were reported.
  • US weekly ethanol production was 306 million gallons, up 1 million gallons from last week and up slightly (1%) on last year. US ethanol weekly stocks rose 5 million gallons to 930 million gallons, up 5% from last year. Positive margins persist for US ethanol producers with estimated revenues over variable costs being at $0.14/gallon. However, US gasoline consumption was down 4% from last year at 8.62 million barrels/day. US ethanol production for the crop year to date is closely following last year into November.
  • USDA will release their weekly export sales report on Friday due to the US Columbus Day holiday last Monday. We look for US wheat sales of 200-300,000 mt, corn sales of 900-1.3 million mt, and soybean sales of 1-1.2 million mt. Chinese demand for US soybeans has only begun to slide this past week as December shipments are covered.
  • A nice mixture of rain/sunshine prevails across Brazil/Argentina for the next 10 days. Northern Brazil will see daily rainfall of 0.25-1.50” with locally heavier amounts. The rain is welcome as farmers speed ahead with spring seeding. And although it is a process, the forecasts are consistent with above normal rainfall and near to below normal temperatures which will help restore lost Brazilian soil moisture. Goias has been the big benefactor of recent day rainfall. Heavy rain will also fall across Sao Paulo and Mato Grosso into the weekend. Forecasted high temperatures will range from the mid 80’s to the middle 90’s.
  • The Argentine forecast is also favourable with heavy rains to return this weekend and no sign of extreme heat. Initial corn seeding is active across Santa Fe, Cordoba, and Buenos Aires.
  • The US election looms large in Chicago and US financial markets. The bears and bulls all have their talking points heading into the November 5 election due to differing platforms on trade and green fuels. Hedge pressure will return on Friday due to an active weekend of harvest. US farmers are tight fisted with new sales with storage availability strained. Soybeans will try to hold contract lows for a few days while December corn finds end user pricing below $4.00.

16 October 2024

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  • Soybeans/soyoil pull back from early rally effort; GFS weather forecast run delayed at midday; EU members vote to delay EUDR for a year.
  • Chicago futures are mixed at midday with the grain futures firm, while soybean and soyoil futures sag. Corn futures are supported by a large 1.6 million mt daily US corn export sale to Mexico (rumoured to be for their corn syrup bottled drink industry) while soybeans sag on reports of China securing additional Brazilian soybeans from February forward while US Gulf exporters seek to blend off poor quality soybeans that are either splits or previously germinated that are being sourced from the S Midwest/Delta. Midwest basis bids are firm as exporters seek N Midwest supply to “blend off” the poor S Midwest/Delta soybeans which has rallied the November/January soybean spread.
  • China is booking US soybeans for shipment through December. However, they will completely switch to Brazil for January until more is known about the November 5 US Presidential election. A new trade war worries China, but they are much better prepared than in 2018 as they continue to expand their Belt and Road trade initiative that includes Brazil. China has sent several high-level trade delegations to Brazil to prepare for securing future tonnages of ag goods. Another Chinese delegation will be heading to Brazil in late October. Politically/economically, China will be favouring Brazilian ag supplies.
  • The US soybean market senses a record large Brazilian soy crop and fading Chinese demand for US soybeans as its December import need is mostly filled.
  • WASDE US 2024/25 soybean export estimates are being questioned and seen as too high. And soybean/grain price ratios are under pressure with long term support noted at 2:1 in the spot Chicago soybean/corn ratio. Technically, soybean futures appear to be in position to test contract lows at $9.75 basis January.
  • Chicago brokers estimate that the managed money has sold 4,300 contracts of soybeans, while buying 6,100 contracts of corn and 2,600 contracts of wheat. In soy products, the managed money has sold 4,200 contracts of soyoil and a bought a net 900 contracts of soymeal.
  • FAS/USDA reported the sale of 1.623 million mt of corn to Mexico (soft drink industry?) with 1.043 mt for delivery in 2024/25 and 579,120 mt for 2025/26. 332,000 mt of US corn to an unknown destination (Spain?) and 175,000 mt of US soybeans to an unknown destination for 2024/25.
  • EU nations signed off on a 12-month delay on their deforestation rule known as EUDR citing time which is needed for end users and importers to secure non deforested supply. The decision must be ratified by the Parliament, but the EUDR fate is known. The EUDR year delay will help Brazil which was behind in certification, and EU end users which will see the expansion of the US crush industry as providing additional supply. It was hoped that US meal export demand would be helped by EUDR as US commercials aided US farmers geo-certify that land has not be recently deforested.
  • Overnight rains were heavy and varied across Mato Grosso as soybean seeding gains speed. The GFS weather model was delayed but has since restarted after a computer glitch. The GFS is forecasting a good mixture of rain/sunshine across Brazil/Argentina for the next 10 days.  Northern Brazil will see daily rainfall chances of 0.25-1.50” and locally heavier. It is a process, but the forecasts are consistent with near to above normal rainfall and near to below normal temperatures across Northern Brazil into November. And the coming dry slot for Argentina will allow farmers to seed first crop corn/soybeans. S American weather leans positive for spring planting and soil moisture replacement.
  • The gut slot of the US corn harvest is ahead with producers to sell what crop exhausts on farm storage. The US soy harvest will wind down this week with cash sales becoming limited. However, the surge in Chicago open interest since Monday reflects that macro funds are returning to the “Trump Trade” and betting on new tariffs and a US/China trade war.

15 October 2024

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  • Chicago weakens on harvest pressure and slowing export demand; NOPA September crush was record large; S American weather forecast favourable.
  • Chicago futures are lower with cash related selling by the farmer helping to refill the cash pipeline. Exporters are disappointed with early soybean seed quality and are raising basis bids for N Midwest soybeans to blend with poorer Delta/S Midwest beans. Otherwise, Central US cash markets are weak with Central IL cash corn bid at -$0.15 while Des Moines is -$0.42/bu under and Toledo is -$0.35 under December futures. The corn harvest is of high quality and the abundance of supply is weighing on basis.
  • We maintain that storage tightness will force a greater supply of the 2024 crop harvest to be sold across the scales, but that soybean processors and ethanol producers will be more strongly bidding for supply by late November.
  • US soybean futures will show greater weakness as China’s demand for US December soybeans is nearly filled. China does not want to secure January forward soybeans amid the uncertainty of US tariffs. China is active in using the Chicago break to secure February-May Brazilian soybeans. Downside price targets are $3.96-4.00 basis December corn, $5.60-5.65 December Chicago wheat and $9.50-9.65 basis November soybean futures.
  • Chicago brokers estimate that managed money has sold 3,600 contracts of wheat, 8,400 contracts of corn, and 6,300 contracts of soybeans. In the products, fund managers have sold 3,500 contracts of soymeal and bought a net 2,800 contracts of soyoil.
  • FAS/USDA reported that 131,000 mt of soybeans were sold to China for the 2024/25 crop year. And Mexico booked 120,000 mt of US SRW wheat. The purchase of just 2 cargoes of US soybeans following a long US holiday weekend was a disappointment. US exporters advise that China is stepping up its purchase of Brazilian new crop soybeans from February onward on the morning Chicago break.
  • For the week ending October 10, the US shipped out just 16.9 million bu of corn and 13.6 million bu of wheat. Soybean exports were much stronger at 57.9 million bu. For their crop years to date, the US has shipped out 185.7 million bu of corn (up 29 million or 18% from last year), 330 million bu of wheat (up 82 million or 33%), and 188.5 million bu of soybeans (down 14 million bu or 7%). The early US soybean and corn export pace is lagging early season hopes.
  • NOPA members crushed 177.3 million bu of soybeans in September, a record and up 7.2% from last year. US soyoil stocks dropped for a sixth consecutive month to 1.066 billion pounds, down 3.8% from last year despite the record September crush rate. The low in US soyoil stocks is normally forged in October with a recovery in stocks during November/December. US soyoil stocks at 1.066 billion pounds on September 30 were the lowest since November 2014.
  • The midday GFS weather forecast features a mixture of rain/sunshine for 2024 spring seeding across Brazil/Argentina. Additional rain is falling at midday for NC Argentina/S Brazil with totals of 0.5-2.00” being reported. The rain is causing farmers to rush seed into the ground.
  • Northern Brazil will see daily showers for the next 2 weeks that will adequately raise soil moisture to near normal. It is a process, but the forecasts are consistent with near to above normal rainfall and near to below normal temperatures into November. And the coming dry slot for Argentina will allow farmers to seed first crop corn/soybeans with the yield risk being later this year due to La Niña from February forward. Argentine farmers will be more aggressive with first season corn and soybean production vs prior years.
  • US producer selling of cash soybeans is noted as farmers nearly complete their harvest and push the extra supply across the scales. But the big worry is slowing Chinese demand for US soy amid the potential for record large S American production. The US and Brazil look to harvest back-to-back record large soy crops. December corn is nearing support at $4.00 while December Chicago wheat is in the middle of the trading range. After a sharp break, look for consolidation with hedge selling expected to close the week.