• US and world grain markets are higher at midday. US weekly export sales were solid across the aboard, while there’s talk that commercials are gearing up for some measure of Chinese demand, and possibly not only just US soybeans. Further details are unavailable, but short positions continue to be liquidated amid positive sentiment. We do mention that for now it is likely to be only state-owned companies in China. Private firms, however, account for the bulk of Chinese soybean imports, and until the 25% tariff on imported US beans is eliminated we caution against chasing rallies higher.

• Through the week ending November 29 US exporters sold 46 million bu of corn, down 3.5 million on the week but well above the pace needed to meet USDA’s forecast. Exporters also sold 33 million bu of soybeans, up 10 million on the week; and 26 million bu of wheat, up 12 million on the week and largest total since August. US wheat business through the week included 9 million bu of HRW, a 15-week high, and a sizeable 8 million of SRW, the largest of the marketing year so far. For their respective crop years to date, the US has committed 1,053 million bu of corn, up 17% on last year; 887 million bu of beans, down 33% on last year; and 573 million bu of wheat, down 11%. Exporters this morning also sold 224,000 mt of HRW to an unknown destination. Concern over availability of high quality wheat in Russia continues. Spot Russian fob values are up sharply this week. Interior Russian wheat continues to forge new two-year highs. Russian flour prices are also higher this week. US soybean export sales continue to lag further behind year-ago levels. It is true that the pace of demand will be steadier without China’s market in 2018/19, but quick Chinese interest is needed to validate the USDA’s forecast.

• Huawei CFO’s bail hearing will be ongoing this afternoon in Vancouver. Recent developments are largely seen in the context of broader issues between the US and China. The Dow at midday is down 350 points. Spot WTI crude is up $2.40/barrel as OPEC and Russia have agreed to cut output by 1.2 million barrels per day, a bit more than expected.

• The midday S American weather forecast into late December remains favourable. A more lasting period of dryness is forecast across Central and Northern Brazil, including the whole of Mato Grosso, in the 8-15 day period. Several rain events are offered to Argentina in the next two weeks, with cumulative totals there reaching upwards of 1.0-2.5”. Still no excessive heat is indicated.

• Wheat’s advance feels more fundamental in nature as demand begins to find the US market, and recall there is a full seven months of the international trade year yet to come.

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

Weekend summary 7 December 2018

• Chicago corn, soybean and wheat futures are lower in morning trade amid the concern that US/Chinese trade has been complicated by the arrest and potential extradition of China CFO Huawei Meng Wanzhou by Canada for the US. The sharp fall in other financial markets and expectation for a strong US December Jobs report added to the early selling. The US DOW has lost more than 1,000 points in the last two trading sessions and investor concern is growing heading into yearend. Sharp losses in crude oil futures is adding to world growth concern.

• Chicago brokers report that funds have sold 4,500 contracts of corn, 3,900 contracts of soybeans, and 3,300 contracts of wheat. In soy products, funds have sold 3,100 contracts of soyoil and 1,900 contracts of soymeal.

• Egypt’s GASC received wheat offers from Russia, Ukraine and Romania. The fob offers ranged from $236.30-250/mt with freight offers ranging from $14.25-17/mt. CIF wheat values ranged from $252.20-265.89 or steady to $5.50/mt ton higher than their last tender in late November. We have heard that Egypt/GASC has started to open LC’s for late November and early December wheat shipments. Most sellers continued to load/float/transit wheat amid financial assurances that were provided by the ministry of supply yesterday. No US wheat was offered to GASC by exporters on price and tightness of GASC specified SRW supply.

• Stats Canada raised their estimate of all wheat production to 31.76 million mt, up modestly from their prior September forecast of 31.0 million. The durum crop was raised to 5.74 million mt, with the spring wheat crop pegged at 23.51 million. Canada’s canola crop was lowered to 20.3 million mt, down from 21.0 million in September, while their oat crop was forecast at 3.43 million mt vs 3.83 million in September. The Canadian wheat data was slightly bearish with the lower canola crop estimate said to be supportive.

• US weekly export sales on Friday are estimated in a range of; 400-600,000 mt wheat, 650-800,000 mt of soybeans, and 900,000-1.1 million mt of corn. US soy sales are pegged in a range of; 150-175,000 mt of soymeal and 4-9,000 soyoil.

• Ag traders are trying to find out if the US/China will be holding trade negotiations next week over IT protection/trade in Washington DC. China will be closely following the bail hearing set for Friday for the Huawei CFO. The meeting may hinge upon how the US handles the CFO extradition case in Canada. OPEC will NOT hold a press conference to gauge what Russia will do with its production. The Russians are expected to join OPEC on Friday for a decision.

• The midday S American weather forecast is little changed from what was offered overnight. An active front pulls through Argentina and S Brazil in the last half of next week to produce 0.5-2.00” of rainfall. The rain persists during the 11-15 day period with less moisture across N Brazil. No extreme heat is evident into late month.

• The DOW and crude oil have fallen sharply which has produced a negative tailwind for US ag products. However, with China buying rumours evident via the weekend G20 trade deal, traders are cautious not to make sales in the hole.

• Tweets from President Trump and US Trade Policy Czar that China was either buying or about to secure US soybeans offered support to the complex this morning. Corn and wheat futures are sagging on news that Egypt’s GASC is delaying shipments of wheat due to problems with LC (letter of credit) issuance. Corn appears to be caught in between (again) the two with the market lacking fundamental inspiration with S American weather largely favourable. The prospect of large S American crops looming is likely to cap rallies heading into the holidays.

• US President Trump tweeted that China would immediately secure US soybeans and liquified natural gas. The news rallied Chicago soybean futures around 7am CST this morning. We can confirm that China started checking US soybean fob price offers late yesterday. Although commercials are unwilling to confirm actual cash buying, they do indicate that expectations that China’s Government will secure some 5 million mt of US soybeans in an old/new crop position. We expect that China will want to book US soybeans before China returns to Washington DC during the middle of the month. Dates are still being worked on, but it is expected that a Chinese delegation will be return to Washington to start negotiations on IT/Industrial protections with USTR head Robert Lighthizer.

• US soybean cash markets should easily be able to absorb 5 million mt of old/new crop soybean demand without much difficulty amid the abundance of supply. Most US exporters are flush with soybeans and to speculate that if China were to book half of the 5 million mt in an old crop position, the 92 million bu would not substantially raise basis bids. And there is no real reason for China to book Chicago futures as cash basis bids are attractive. We cannot confirm Chinese interest in US corn, sorghum, ethanol, DDGs or meat or dairy products at this time. It is possible that China could make purchases if US/China negotiations are fruitful but making purchases ahead of a deal would cause cancellations if the negotiations turned politically sour. Our expectation is that China will wait to gauge how US/China IT protection negotiations progress before seeking other US ag/energy products.

• The midday S American GFS weather forecast is drier across SC Brazil and much of Argentina with rains of 0.25-1.00”, or about 50% drier than what was offered overnight. The confidence is the forecast is diminished based on the change from prior runs. Yet, a high-pressure ridge shows more stability that will have to be closely monitored. No extreme temperatures are noted, but as soils dry, temperatures could rise during the last week of December. Better rains are needed across Argentina and S Brazil, but so far, the dryness is not having an impact on crops via cool temperatures and adequate soil moisture.

• The odds are high that China is either buying or will soon buy US soybeans for their reserve. China’s leadership has returned home from S America along with a trade delegation from Brazil. If there is to be immediate US ag buying, now is the time. The Chinese delegation is expected to return to Washington for negotiations in 8-10 days. The delegation does not want to show up without making sure prior agreements are fulfilled.

• It has been a mixed morning, with fund short covering ongoing in row crops while wheat is a bit weaker on the lack of response from world markets. Crosscurrents persist. As we have mentioned, there are more questions than answers regarding US/Chinese trade dialogue. EU equity markets closed weaker. Energy markets anxiously await news on OPEC production levels. And more attention is being paid to a further flattening of the US interest rate curve. US three-year rates now have a premium to 5-year rates. This is by no means the most widely followed spread, but a flattening bond curve has typically foreshadowed economic weakness in the US. This is only one of many signals of future economic performance, but it is likely that the Fed takes a hiatus with respect to raising benchmark rates moving forward.

• The US$ is slightly weaker at midday, while gold has risen to a new five-month high. We believe that a lasting high was scored in the US$ in mid-November. Rising debt should allow for a steady/slightly weaker trend into the first part of 2019. Key will be whether hard assets attract additional investment. Index funds have yet to commit to raw materials. Otherwise, we also mention Ukrainian corn basis is down sharply as the market there looks for export demand. The rise in Russian wheat fob prices has stalled at $230/mt, vs. a seasonal high of $233 in mid-October. The Buenos Aires Grain Exchange’s weekly report should show another modest improvement in Argentine corn crop ratings. European drought will ease further as low pressure aloft moves into Central Europe on the weekend. Above normal precipitation is forecast into mid-December.

• EIA’s weekly energy report will be delayed until Thursday, with export sales pushed to Friday. Uncertainty over an OPEC and Russian cut in crude production continues. OPEC members meet Thursday in Vienna.

• The midday S American GFS weather forecast is unchanged from the early morning solution and remains generally favourable. Excessive rain in Brazil will be forced in the far northern fringe of the country’s ag belt. Confidence is rising with respect to better rain changes in Argentina. This morning both the EU and GFS models included this pattern shift in their respective seven-day forecasts. A much wetter trend looks to develop in Argentina no later than next Mon/Tues. Excessive heat in S America remains absent.

• US-China trade and energy markets both face elevated uncertainty in the weeks and months ahead. This continues to muddy longer term outlooks.

• The UK Government’s parliamentary vote losses today do not bode well for next week’s Brexit vote. Our concern over the UK exchange rate post-vote is growing and we would certainly be looking to take some protection ahead of the vote to protect against what looks certain to be volatility.

• Fund short covering and cash selling has been active in Chicago as corn, soybeans and wheat rise to moderate gains. The volume of trade has been huge as funds exit a portion of their positions as soybean futures score six-month highs. US and Brazilian farmers are active in selling cash soybeans/corn on the rally as cash prices push strongly upwards. The movement is large enough that we expect that cash basis levels will be in retreat later today. So far, there is no evidence that China is securing US soybeans.

• We look for a strong Chicago close amid an open chart gap with funds having additional shorts to cover. However, unless Chinese demand is seen/confirmed, we think corn/soybeans will be limited to strong Chicago rallies. China’s tariffs remain in place which prevents private Chinese soy crushers from making US purchases. We note that US pork futures are sharply lower. If China was to secure US ag commodities, US pork would be on the top of their list, ahead of the early February Lunar New Year. No private buyer of US ag goods is seeking US grain, meats or other ag products according to cash sources. Maybe this demand will develop, but a Chinese buyer will not chase a Chicago rally with just 90 days to secure/ship/land the goods. Chicago financial markets will be closed on Wednesday to honor President Bush. Chicago has decided not to close the ag markets, they will trade normally.

• Weekly Export Inspections for the week ending November 29 were; 40.8 million bu of corn, 38.3 million bu of soybeans, and 17.4 million bu of wheat. The soybean and corn export totals were on the high end of expectations. Wheat exports were just routine. US soybean exports are 353 million bu behind last year’s pace, WASDE will not change their US 2018/19 soybean export estimates due to the weekend trade truce between the US/China. Chinese trade tariffs have not been reduced, so WASDE will assume no change in US/China soy trade. WASDE would have to see actual new sales or a lowering of tariffs to make any change.

• The midday S American weather forecast is close to the overnight solution with above normal rain to fall across the northern half of Brazil with totals of 3-8.00”. Much below normal rain is expected across Argentina and S Brazil as spring planting accelerates. No extreme heat is foreseen due to persistent cloud cover across N Brazil. Highs will range from the 80’s to lower 90’s across Brazil. The dryness across Argentina and S Brazil is favourable for now, the good news is that showers return in the 11-15 day period. The rains would be ideal for crop development. The S American weather forecast is favourable except for above normal N Brazilian totals.

• Chicago traders argue that they need to taste/feel Chinese demand and a lowering of their domestic tariffs to sustain a Chicago rally. The trade truce places a peg of support under Chicago at last week’s low amid the prospect of China buying. US wheat prices can’t rally much further, or risk become noncompetitive in the world marketplace. And Chicago corn is facing headwinds on the prospect of record large Latin American production and reduced US exports beyond May.

• The G20 meeting has started in Argentina and Chicago grain values are firmer on optimism that China will offer to buy more US goods (including agricultural products) to reduce the US/China trade deficit. Most experts agree that there will be little progress on IT protection and China’s industrial ambition, but the key question is whether Trump will allow a “trade truce” to work through the complexities of IT protection. Such a truce would only occur with China’s promise of large Chinese purchases of US goods, and there was a deadline for reaching a IT deal. To date, China has not admitted any theft of IT property and for the Government to agree to negotiations would be a big step forward. USTR head Robert Lighthizer on the sidelines of G20 said that he would be surprised if the China dinner fails.

• For the US is to enter into a “trade truce” would require that China open its market to greater imports of US goods (including ag) that provides Trump with a win in terms of getting China to bend on the Chinese trade surplus. The IT and industrial policy part of US/China negotiations are so complex that it will take months (maybe years) to complete. The hope of the US ag industry is that China is willing to open its markets such that negotiations on IT protection can continue well into the middle of 2019. The next 36 hours will tell if China is willing to throw open their markets and talk IT thereafter.

• FAS announced that 120,000 mt of US soybeans were sold to an unknown destination. The US/Mexico/Canada signed the USMCA agreement today for North American trade. The agreement will now go back to each government for legislative approval. There are political headwinds for a US approval and should there be any long-term approval delays, NAFTA could return. There are objections for Democrats in the House that there is a need for the agreement to be modified. There are rumours that the US is willing to drop their steel/aluminum tariffs early next week now that the agreement is signed. We would highlight that they are only rumours, but that would be enough for Mexico/Canada to drop their tariffs on some US ag goods including meats and dairy products.

• The Brazilian soy crop estimates continue to rise, we expect that CONAB will raise their crop estimate to 122-124 million mt in their December report.

• The midday S American weather forecast is similar to the overnight solution with much above normal rain to fall across the northern half of Brazil with totals of 3-8.00”. Below normal rainfall is expected across Argentina and S Brazil as spring planting accelerates. No extreme heat is foreseen due to persistent cloud cover across Brazil. Highs will range from the 80’s to lower 90’s across Brazil. The dryness across Argentina and S Brazil is favourable for now, but concern is growing that Asian rust (plant disease) could hurt soy yields in Mato Grosso, Goias and Bahia amid weeks of above normal rainfall. Producers are spraying fungicide to combat the disease.

• Sunday night will prove dynamic for Chicago trade as the details of the Trump/Xi dinner is known. The market is optimistic on some sort of truce. We are not alone in not having any idea what the final deal will be. However, amid growing S American crop sizes, one would have to be careful about becoming too bullish as new competition for US soybean exports is only some six weeks off. Wheat has more upside risk as world demand shifts to the US/EU. Corn is a tug of war between soybeans and wheat.

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

Weekend summary 30 November 2018

• “Tweets and Political Trade Posturing” has been trade in Chicago with corn, soybeans and wheat trading either side of unchanged. The volume of trade has been active in corn, but less so in wheat and soybeans. Algo trading funds that trade the news have been active with purchases in corn/soybeans on the early tweets from Trump. Chicago lacks a trend and most traders expects fireworks on Sunday night from whatever comes forward from G20 and Argentina. We maintain that trading politics is nearly impossible and lasting trends in Chicago will be difficult to sustain. Our expectation for the close is mixed, with selling in soybeans as US/S American farmers are picking up their cash sales. US farmers appear to be willing to shed some cash soybean supply while holding onto their grain stores.

• Chicago brokers report that funds have bought; 2,300 contracts of wheat, 5,500 contracts of corn and 5,500 contracts of soybeans. In soy products, funds have bought 2,100 soymeal while being flat in soyoil.

• President Trump in a press briefing (and tweet) suggested that he may be close to a deal with China. However, it also commented that he liked the flow of billions into the US Treasury, and he may not do a deal. Chicago rallied and then eased as the double talk made a bull or bear position difficult. Importantly, Trump has asked China Trade Hawk Peter Navarro to join the Trump/Xi dinner which will be seen by China as adversarial. Most Washington watchers thinks the inclusion of Navarro reduces the chances for a trade truce. Trump also stated that he will not be meeting with Putin due to raw nerves with Ukraine amid the capture of their naval vessels on Sunday. There are so many variables in the air that it will be up to the personal relationship of Trump and Xi and whether they can find common ground to call for a truce. No one knows what will happen with this important G20 meeting.

• US export sales for the week ending Nov 22 were; 13.9 million bu of wheat, 49.9 million bu of corn, and 23.1 million bu of soybeans. For their respective crop years to date, the US has sold 547 million bu of wheat (down 84 million or 13.3%) 1,007 million bu of corn (up 140 million or 16%), and 854 million bu of soybeans (down 407 million or 32%). The sales totals were deemed neutral/slightly bearish.

• There is a growing political risk that the Trump Administration may shut down the US Government if funding for a US/Mexico border wall is not raised to $5.0 billion in an Appropriations Bill. The shutdown would occur around Dec 8 and it could impact the USDA Dec WASDE report (and weekly export and sales reports).

• The midday S American weather forecast is similar to the overnight solution with above normal rain to fall across the northern half of Brazil with totals of 3-8.00”. Below normal rainfall is expected across Argentina as spring planting accelerates. No extreme heat is foreseen due to persistent cloud cover. Highs will range from the 70’s and 80’s across Argentina and the 80’s to lower 90’s across Brazil.

• Sunday night will prove to be dynamic for Chicago trade as the details of the Trump/Xi dinner to resolve trade differences are known. Our advice is to hope for the best but manage risk like it is a monthly USDA crop report. No one really has any idea whether the US/China trade war will have a truce or push to a more aggressive phase, consequently look for choppy Chicago trade to continue into the weekend.

• Russian wheat export volumes will likely be in sharp decline beyond the middle of December as exporters adhere to pledged export totals and the cost of replacement soars as wheat must be sourced from deeper in the interior as stocks in the west are exhausted. There are eleven time zones in Russia and trucking or railing it from Siberia to the SE Russian export market is extremely expensive. The big Russian wheat program has would seem to have reached its zenith.

• It has been a morning of positioning with deeply green values this morning. The market is too short of soybeans/soyoil, which heading into a weekend of political uncertainty (G20/Trump/Xi) is producing active fund short covering. The grains are following. A deepening trade war worry pressured the market on Monday with recovery over the past two trading sessions. The rally has been bigger than the decline as funds are short nearly 70,000 contracts of soybeans and 76,000 contracts of soyoil. We see no reason for spot Chicago soybean futures to rally above $9.00 without a trade deal. Chinese President Xi speaking in Spain pushed free world trade rather than regional protectionism. Xi offered conciliatory statements on US/Chinese trade and IP protection, which Chicago liked. However, the Xi statements are not implying that China is willing to bend to US demands. There remains great political uncertainty as to what US President Trump will accept as a truce.

• Chicago brokers report that funds have bought; 3,100 contracts of wheat, 5,500 contracts of corn and 6,100 contracts of soybeans. In soy products, funds have bought 2,200 soymeal and 6,800 contracts of soyoil. FAS reported that the US sold 268,748 contracts of soybeans for delivery to unknown destinations. The rumoured buyer is either Mexico or the EU. Algeria purchased 600,000 mt of optional origin wheat on Tuesday. Some traders argue that US HRW wheat was included in the sale by Cargill. The wheat would have to be dramatically discounted on a FOB basis to work.

• The midday S American weather forecast is like the overnight solution with heavy rains slated to fall across the northern half of Brazil with totals of 3-8.00”. Below normal rains are expected across Argentina as spring planting accelerates. No extreme heat is foreseen due to persistent cloud cover across Brazil. Highs will range from the 70’s and 80’s across Argentina and the 80’s to lower 90’s across Brazil. The forecast is generally favourable for crops with too much rain for local parts of Brazil.

• The politics of trade is driving Chicago markets this morning. Soy prices are higher on the hope for a US/China deal. Research leans that a truce will be reached at the G20 dinner between Trump/Xi late week. However, it is it can only be a best guess. On the bearish side, China may be willing to bet that Trump has just 12-18 months of leadership remaining, before the next US election process starts. For China, this is not a lot of time with Brazil looking to produce a record large soy crop of 122-126 million mt. The point is that strong rallies near $9.00 would appear to be a near to mid-term upside for soybeans as this price has halted Chicago soy rallies since the US/China trade war started last summer.

• US wheat futures are lower with the row crops firmer at midday in Chicago. Soybeans have led the bullish charge with double digit gains tied to news that a US Tax Extenders Bill includes a plant/animal-based feedstock biodiesel credit that starts at $1.00 gallon, followed by a gradual subsidy phase out and expiration in 2024. The renewed subsidy has supported a rally in soyoil futures. If the Bill is passed (expected) it would help maintain US soy crush margins. We note that US soyoil demand is record large due to the ending of Argentine biodiesel imports last year.

• Chicago brokers report that funds have sold; 4,500 contracts of wheat, while buying 200 contracts of corn and 4,300 contracts of soybeans. In soy products, funds have sold 1,200 soymeal and bought 4,300 contracts of soyoil.

• Algeria is tendering for wheat with the result due Wednesday. It is widely expected that Argentina will fill the tender, but US export sources report that US HRW wheat on a landed basis almost works. French fob SRW is the most expensive soft wheat in the world at $233/mt, but because of its proximity to Algeria, its only $3-5/mt more on a landed basis. Key will be whether the French are willing to sell wheat below replacement to gain the business.

• There are rumours that Chinese traders had heard that President Trump was going to bash China with talk heightened tariffs late Monday. They sold soybeans ahead of the news. These traders are said to be now covering short soybeans as the market did not follow through. Moreover, we note that unlike prior tough tariff talk from President Trump, China made no comment on being bullied overnight. A Hong Kong scholar Lau (close ties to the Chinese Government) indicated that a truce in the trade war would be offered in Buenos Aires with the details to be ironed out in a framework negotiating agreement. Soybeans are trading back and forth as the political winds blow ahead the G20 meeting!

• Russia is unwilling to let international mediators settle their dispute with Ukraine with President Putin to announce Russia’s response in the next few days. The nerves in the Black Sea are raw and need to be closely monitored

• The midday S American weather forecast is slightly drier for Argentina, but equally wet for Brazil. Totals of 3-6.00” of rain look to drop across the northern half of Brazil with 0.5-2.00” for S Brazil and Argentina over the next 10 days. Near normal rains are expected across Argentina as spring planting accelerates. No extreme heat is foreseen due to persistent cloud cover across Brazil. Highs will range from the 70’s and 80’s across Argentina and the 80’s to lower 90’s across Brazil.

• Big picture politics rules once again. Today there is trade optimism from China that a framework for further talks can be uncovered in Buenos Aries at G20. China did not respond to new Trump Trade Tariff threats overnight. Traders are pessimistic on the prospect for a US/China trade framework while US farmers are optimistic. If the US and China call a truce and keep negotiations going; that will be seen as bullish for Chicago. It is China trade, Ukraine/Russia, and Brexit that holds the market’s attention. This produces whipsaw markets. First notice day looms on Friday against Dec futures. Trading politics is more difficult than trading a weather market.

• The summer row crop markets have felt selling pressure from the opening as bearish bets are placed against the coming US/China trade dinner later this week. The market doubts that the US and China will be able to come to an agreement which has sent soy futures lower this morning. Moreover, traders continue to discuss favourable S American weather and the coming competition of trade for the US. Corn has followed soybeans, while the wheat market hangs on the green in building US and world wheat demand. We look for a mixed close as traders try to position for Trump/Xi G20 event.

• Chicago brokers report that funds have sold; 7,500 contracts of soybeans and 5,900 contracts of corn, while buying 1,900 contracts of wheat. In soy products, funds have sold 3,200 soymeal and 3,500 contracts of soyoil. An increase in Brazilian cash related selling of soybeans is noted this morning. Farmers fear that a US/China trade deal could get done which further drops their cash premiums. The Brazilian market has been suffering from deflating premiums for much of the past three weeks, and farmers are worried with crops looking favourable heading into December.

• Goldman Sachs has put out a bullish general commodity forecast this morning with energy, metals and even ags topping their purchase list. Goldman argued that in 2019, commodities should enjoy a 19% return. Goldman looks for the late week US/China trade agreement and an OPEC cut of crude production as providing the fundamental inertia to start a rally. The Goldman buy recommendation is likely to have asset managers looking at commodities by year end.

• The Russian ag ministry forecast their initial 2019 grain crop at 110 million mt, the same as this year. Total planted area is estimated at 80.5 million ha, an increase of 1.3 million ha. The report made no mention of winter wheat acres, but a modest increase was likely included. It needs to be remembered that for the past three years, Russian winter grains have escaped winterkill damage. It will be interesting to see that occurs in 2019. Producer sources tell us the condition of the 2019 Russian wheat crop is well below 2016 or 2017.

• US export inspections for the week ending November 22 included 40.6 million bu of soybeans, 44 million bu of corn, and 9.3 million bu of wheat.

• The midday S American GFS weather forecast is wet for N and C Brazil over the next 10 days. Totals of 3-6.00” look to drop across the northern half of Brazil. Near normal rains are expected across Argentina as spring planting returns following heavy rains during the first half of Nov. No extreme heat is noted with temperatures to average near to below normal due to persistent cloud cover. There is a risk of too much rain falling across N Brazil that could cause an increase in disease pressures.

• Forecasting trade politics is impossible. One can take educated views, but that is about it. President Trump has smouldering battles that he must tend to on the international front in; Iran, the Saudis, the Chinese and now the Russians and their provocation of Ukraine. Will Trump get tough with Russia, unlike Obama when the Russians took Crimea. Ukraine is said to be pulling its wheat offers in the world market. It is hard to become bearish of sub $3.60 Dec corn or sub $4.60 Dec KC wheat. Our view is that although politics are uncertain, there is more risk to the upside than downside, as we have previously publicised.