Author Archives: simon

28 October 2022

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  • HEADLINES: Row crops recover; Dow surges 700 points.
  • Chicago ag markets have recovered from morning lows amid surging equity markets and as corn and soy can’t quite shake firm and rising interior basis levels. That basis has been so strong during the throes of harvest is noteworthy and hints at some measure of ongoing supply/demand imbalance. Soy crush margins remain incredibly profitable. Cash ethanol production margins this week are up slightly amid strength in ethanol prices. Export demand is critical in the long run but until final yields and Sep-Nov residual disappearance is known, the market will have difficulty in understanding just how tight near-term supply and demand is. The Dow at midday is up 700 points and sits at the highest level since late August.
  • The next major move will be a function of S American soil moisture in late Nov/early Dec, and even this is uncertain given the return of La Niña-based dryness in Argentina and a projected 10-day dry spell in Central Brazil beyond early next week. Climate outlooks maintain favourable weather in Brazil throughout the autumn and winter months, but the S American growing season in 2022/23 is the most important in years.
  • Rigidly neutral trade has not been limited to US markets, but a lack of conviction is clearly present elsewhere. Brazilian corn futures and basis levels have failed to rally, despite Black Sea export corridor concerns, but Brazilian corn is near a record price for late Oct. Record Brazilian export demand provides support on breaks there. Corn and soy have found equilibrium values. Wheat will be subject to disruptions in Black Sea shipments Nov onward, though we reiterate that the pace of Russian wheat exports has risen since early October. Russian wheat will be cheap indefinitely.
  • We estimate that managed funds today are long a net 250,000 contracts corn, unchanged from last week, 70,000 contracts of beans, up slightly, and short a fairly sizable 26,000 contracts of wheat in Chicago. Wheat’s short is subject to covering.
  • We are uncertain regarding the evolution of Black Sea trade if the corridor is eliminated or adjusted, but it is a headline risk that dominates wheat price discovery in the short run.
  • The S American GFS weather forecast is again unchanged in S America into the middle part of November. Soaking rainfall of 1-4” impacts Paraguay and Parana and Sao Paulo in southern Brazil on the weekend. Regional showers of 1-2” are forecast in Mato Grosso do Sul and Mato Grosso early next week. All but RGDS in far southern Brazil will be well watered on Nov 1. A lengthy drier pattern follows, with little/no rainfall offered to any crop region in S America Nov 1-10. Brazilian soy seeding will race ahead. The return of regular showers will be needed soon thereafter.
  • Markets cannot break until favourable S American weather in Dec is confirmed. Rallies struggle on sluggish global trade. Our long-term concern is that global weather patterns improve as La Niña and the US loses additional market share to S America in crop year 2023/24.
To download our weekly update as a PDF file please click on the link below:

27 October 2022

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  • HEADLINES: Chicago weakens on dollar strength; US economy grew in third quarter; Corn export demand disappoints.
  • Chicago ag markets have turned lower at midday amid disappointing corn export sales, the US dollar’s recovery at chart-based support and amid concern over economic growth in emerging markets. Third quarter GDP growth in the US was released this morning at 2.7%, which follows contraction in the first half of the year. The Dow at midday is up 300 points at a newer monthly high. But the Egyptian pound has fallen 17%, in one day, as the IMF’s agreement to loan the country $3 billion requires a more flexible, free market exchange rate regime. The US being a relative safe haven for investment provides structural support to the dollar index. Confidence in other markets is lacking.
  • US corn export sales through the week ending Oct 20 totalled just 10 million bu, vs. 16 million the previous week. This is nearly 20 million bu below the pace needed to meet the USDA’s 2022/23 target and also accounts for just 26% of annual projected exports. On average US corn commitments as of mid-Oct account for 35-37% of annual shipments. Pace analysis suggests USDA must lower its 2022/23 forecast by 100 million bu at minimum.
  • US soy and wheat demand fared better last week. Wheat sales totalled 20 million bu, vs. 6 million the previous week and were the largest since late August. Soybean sales were 38 million bu, vs. 86 million the previous, but total commitments are in line with the USDA’s 2022/23 forecast. China secured 41 million bu. US meal sales were a decent 217,000 mt.
  • Soy sales have picked up in October amid seasonally strong/absent Brazilian offers, but it is unlikely that WASDE moves to increase soy complex or wheat exports in future reports. Some 200+ million people this week are stuck at home via China’s ongoing zero-tolerance Covid policy. China’s Party Congress last week reiterated its unwavering commitment to this policy, which over time will have an impact on total food consumption there.
  • The choppy nature of the markets continues. It is difficult to be bearish amid firm energy markets and elevated processing margins. Spot crude has extended its overnight rally to $1.20/barrel. But fear over tight stocks/use is diminished without the potential for sustained export demand.
  • S America’s cash corn market has been unmoved in the face of rising Black Sea tension and the rapidly approaching deadline to extend the export corridor. We expect Black Sea exports to be challenged Nov onward, but that Brazilian exporters remain aggressive is telling. Gulf premiums are unlikely to improve, with Mississippi River level contraction still indicated beyond the next 24 hours.
  • The midday S American GFS weather forecast is consistent with the morning solution. Heavy rains fall across Parana and Sao Paulo in Southern Brazil over the next 4 days. Scattered showers impact central and northern regions of Brazil. Arid weather will be in place across the whole of Argentina into Nov 10. A dry pattern also envelops a majority of Brazil in the 6–15-day period, which for now is viewed as a positive. Soy seeding will advance rapidly, and drier conditions will be cheered by producers in areas of S Brazil inundated by heavy rainfall in October.
  • Markets have found equilibrium. The USDA’s Oct balance sheets have been fully digested, and even wheat markets are aware of future Black Sea export issues. Weak importer currencies weigh on demand. US basis levels imply ongoing supply issues.

26 October 2022

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  • HEADLINES: US$ collapse supports Chicago; US energy stocks stay tight.
  • Chicago markets are firm at midday, with wheat recovering morning losses on rising Black Sea tension. Modest premium has been added to corn and soy markets amid strong interior basis levels, elevated domestic end user margins and firm energy prices, but enthusiasm remains lacking. We would reiterate that current prices seem to be well aligned with USDA US and global stocks/use projections. Markets await new input. Long-term direction hinges upon S American surpluses in early/mid-2023 and Argentine and Brazilian weather in Oct doesn’t quite yet correlate strongly with final yield.
  • The Dow, too, has reversed early weakness and at midday is up 115 points. Crude oil has extended overnight strength, with spot WTI up $2.90/barrel at $88.20. Energy prices worldwide provide a pillar of support to biofuel-based crops and there is no indication that crude stocks build in the near term.
  • US crude stocks minus strategic reserves on Oct 21 totalled 440 million barrels, vs. 437 million the previous week and up 2% year on year. 163 million barrels have been shed from the strategic crude reserve since April 1, and total US crude stocks of 842 million barrels are down 19% from last year. Motor gasoline stocks last Friday were 208 million barrels, down 4% from the previous year and the lowest for late Oct since 2014. Energy supplies are tight.
  • The US ethanol industry has benefited, from ethanol’s exposure to gasoline consumption (not stocks) which has buffered against total corn grind. Ethanol production in the week ending Oct 21 totalled a season-high 304 million gallons, vs. 298 million the previous week but down 7% from the same week in 2021. Recall ethanol stocks last year were abnormally low and plant revenue was an incredible $1.00-1.20/Bu above all costs. Margins are currently decent, but not overly exciting.
  • The US$ is down a full 1%, and key is whether the index can hold major chart-based support at 109.5 this week. It is tough to be bearish the dollar given at least one more rate hike lies in the offing, but chart reversal confirmation will attract speculative raw material investment.
  • The Australian weather forecast lacks additional soaking rain, but the GFS hints at unwanted totals of 0.50-1.50” across already waterlogged areas of Victoria and New South Wales Oct 31-Nov 2. Widespread crop damage is being reported from important areas of north-eastern NSW.
  • The S American GFS weather forecast remains drier than the overnight EU solution as it has eliminated the chance of follow-up showers in eastern Argentine crop areas early next week. A lengthy period of dryness resumes in Argentina, with little/no rain indicated into Nov 10. The midday GFS forecast is also drier in Mato Grosso and Goias in Central Brazil. This will be monitored, but intermittent dryness for now is favourable to the completion of soybean seeding.

25 October 2022

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  • HEADLINES: Chicago recovers in tandem with financial markets; GFS weather forecast drier in Argentina.
  • As goes the financial market, so goes Chicago. Corn and soy futures have reversed overnight weakness amid a plunging US$ and a firming of equity markets, while weak US housing data fuels debate over whether the Fed has reached peak hawkishness. Wheat markets globally can’t quite shake a renewed downtrend in Russia’s interior and fob prices. The Dow is up 280 points at a new monthly high following solid earnings report, and while fear over economic contracts stays extremely high, it is timing of reduced consumer spending/food consumption that remains uncertain. Spot WTI crude oil is up $0.50/barrel at $85. Paris milling wheat is down €3.00/mt at midday. Canadian canola is up $4/mt and remains perched at an 11-week high.
  • Strength in meal and oil this week has rallied futures-based soy crush margins to $3.25/bu, vs. $2.50 a week ago and vs. $1.70 a year ago in late October.
  • Positive Midwest meal and oil basis places physical cash crush margins at $5.00+/bu. Crush will be maximised once the new crop is fully available to processors. Decent ethanol production margins are also noted, and it is tough to be overly bearish of end user margins nearby given the strength in energy markets. The International Energy Agency this morning reiterated that oil producers cutting production amid tight natural gas supplies will leave fossil fuels in short supply. Total US crude stocks, including strategic reserve stock, on Oct 21 were down 19% year on year at 843 million barrels. Biofuel economics stay positive.
  • Wheat, however, continues to reel from Russia’s aggressive sale to Turkey over the weekend, with Russian fob wheat for Nov-Dec this morning quoted at $310-315/mt, vs. $315-320/mt last week and vs. a recent peak of $335 in early October. A weakening Ruble is positive for exporter profitability even at current prices, and until there are signs that Black Sea grain flows are disrupted via an elimination of the corridor deal or new sanctions, cheap/abundant Russian wheat acts as a weight on the marketplace. Russian wheat exports last week were a full million tonnes, the largest of the season to date.
  • US export demand in general remains a concern. FAS’s daily reporting system was again void of new sales. We note that spot Gulf corn is quoted just $17/mt below Dalian corn in China, which compares to a discount of $150/mt last year.
  • The midday S American GFS weather forecast is drier in Central and Northern Argentina than previously and keeps needed soaking rainfall confined to La Pampa and Buenos Aires. The GFS forecast this week has been a bit drier than the better performing EU solution, and key this afternoon is whether the EU model maintains rainfall of 1-2” in Cordoba and Santa Fe. Otherwise, the GFS forecast is wetter in Southern Brazil and Goias. Brazilian crop threats remain absent. Early vegetation health in Brazil is better than last year and average.
  • It appears that neutral price trends stay intact through late autumn. That firm interior basis remains intact through harvest is noteworthy, and US supply pressure will be fading early Nov onward. But markets at current prices are aligned with USDA balance sheets, and we see a slow building of stocks in winter/spring amid lacklustre export disappearance. Lasting rallies require new supply threats.

24 October 2022

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  • HEADLINES: Corn recovers again; Soy extends losses despite large exports.
  • Chicago futures are mixed, with soy extending overnight losses and corn and wheat near unchanged at midday. The corn market in recent sessions has faced selling early only to be absorbed by end user buying, and there remains a lack of compelling evidence to support a move in either direction nearby.
  • Even Black Sea grain flows are viewed as mixed. The corridor has been somewhat successful to date. Russian wheat exports are likely to reach 4.5 million mt in October, which matches the previous year’s total. Ukrainian exports in Oct will be a season high 2.5+ million mt. Turkey’s TMO was able to buy sizeable tonnage of Russian origin at an implied fob price of just over $300/mt, vs. German hi-pro wheat at $340, basis fob. Russian sales and shipments to Turkey in particular have been aggressive and seamless since late summer. (Thank you for brokering the corridor maybe?)
  • But we note that some 150 vessels await inspection at Istanbul, which along with a lack of corridor extension guidance leaves vessel owners with some very big decisions to make in the next 1-2 weeks, whether to have vessels in the Black Sea beyond Nov 22.
  • More attention is being paid to global corn fob relationships, with livestock markets along the west and southeast coast beginning to calculate the price of importing corn from S America. Brazilian fob corn remains offered some $1.50/bu below quotes at the Gulf and across Southeastern feed terminals. We doubt Brazilian corn pencils in just yet, but this does suggest $7.10-7.20 provides strong fundamental resistance given Brazil’s record surplus. Additionally, Mississippi River levels are unlikely to improve in the near and medium terms. Coming rainfall across the E Plains and SW Midwest is welcomed, but dryness resumes Oct 30-Nov 9. November’s climate outlooks feature near normal temperatures and below normal precipitation in all but the Pacific Northwest. Gulf basis levels stay elevated.
  • US export inspections through the week ending Oct 20 included 19 million bu of corn, vs. 18 million the previous week, a meagre 5 million bu of wheat, vs. 9 million the previous week, and a massive 106 million bu of soybeans, vs. 71 million the prior week. Soy inspections were the largest since Nov 2021, and exports from the PNW exceeded those from the Gulf for a second consecutive week. Physical soybean exports will be robust into late autumn amid large existing commitments.
  • For their respective crop years to date, the US has shipped 148 million bu of corn, down 22% from last year, 279 million bu of soybeans, down 12%, and 348 million bu of wheat, unchanged from mid-Oct a year ago.
  • The midday S American GFS weather forecast is wetter in Southern Brazil and consistent in Argentina. Soaking rainfall of 2-4” forecast in Parana and Mato Grosso do Sul into Oct 31. Needed rainfall of 1-2” will expand southward into the drier areas of RGDS in far southern Brazil. Argentine precipitation coverage will be more scattered, but it remains that soil moisture will be stabilised in key areas of Cordoba, Buenos Aires & Santa Fe.
  • Interior US cash markets have performed better than expected amid the need to move supply from the principal Midwest to deficit areas of the Plains and southeast. Soybeans crush margins are incredibly profitable. But rallies will struggle amid timely soy planting in Brazil and as Gulf corn premiums stay at historically high levels.

21 October 2022

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  • HEADLINES: Chicago finds support amid rising equity market, reversal in US$.
  • Chicago futures have reversed early weakness amid another tranche of supportive macro input and as US end users remain active in absorbing breaks. The Dow at midday is up 375 points as the market continues its debate over the extent of Fed hawkishness. Earnings reports in recent days confirm strong US consumer spending, and while debt is concerning, it is the timing of economic contraction that remains unknown. The US$ has fallen sharply. Crude is up $0.30/barrel at $84.80.
  • Other breaking news is lacking. Coming rainfall in Argentina is unlikely to materially improve wheat yield potential there amid a complete lack of subsoil moisture currently. An unrelenting pattern of rainfall is offered to South Australia and New South Wales into early Nov.
  • Wheat will remain especially sensitive to changes in macro sentiment given managed funds’ current net short position in Chicago and as there is still no concrete guidance on whether the Black Sea export corridor will be extended. Turkish President Erdogan today is optimistic that the deal will be renewed in November, but until it is signed uncertainty prevails. Turkey purchased 470,000 mt of likely Black Sea origin this morning.
  • As has been the case since February, it is vessel/vessel insurance companies that will in large part determine the intensity at which Black Sea wheat and corn find the global market. Vessel owners in the days/weeks ahead must decide whether enter the region without knowing the corridor will remain in place beyond Nov 22. All sides of the hope for clarity well before the deal expires.
  • Market choppiness is most probable into late year. It is tough to be overly fearful about supplies nearby as the US harvest will continues its rapid advance. We estimate that soybean harvesting on Sunday will be 75-80% complete, with corn harvesting to reach 55-58% finished. The pipeline will be increasingly filled. This supply will be absorbed by feed and industrial sectors, but river market stocks will be rising indefinitely amid river logistics issues. The market will be defined by an ongoing tug of war between domestic processors and exporters.
  • FAS’s daily reporting system was void of new US export demand this morning. CIF corn and soy basis at the Gulf is up another $0.15-0.20/bu for Oct-Nov.
  • An historically shallow Mississippi River will continue to keep US corn/wheat non-competitive in the world market and further incentivise soy importers to defer purchases to S American in late Jan/Feb. This is a big deal in the long run, and a lasting period of soaking rain is needed.
  • The midday US GFS weather forecast is consistent with the morning release in projecting rainfall of 1-2” across OK, E KS, MO and IL. The heart of the HRW misses out. A pattern of dryness resumes in all areas Oct 27-Nov 5.
  • The midday S American GFS weather forecast is wetter in Cordoba Argentina, with totals there into next Wed-Thurs pegged at 2.0-2.5”. A nice mix of rain/sun continues in Central Brazil.
  • Cross currents include continued uncertainty over US yield and Black Sea exports, profitable domestic margins but pitiful grain export demand, and a probable recession globally in 2023. Markets are stuck in the near-term, but unlike the bull market to date, the lack of a demand driver must be acknowledged.
To download our weekly update as a PDF file please click on the link below:

20 October 2022

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  • HEADLINES: Soy leads rally on strong export demand; Argentine forecast trends wetter.
  • Chicago ag futures are high at midday amid supportive macro input, better than expected soybean export sales amid this week’s flood of importer wheat demand. Saudi Arabia’s tender for 535,000 mt of optional origin supply for spring arrival has been added to tenders from Turkey, Pakistan and Iraq. All told, some 1-2 million mt of demand is in play, and purchase results will be critical to the world cash wheat market’s direction. Russian wheat offers remain aggressive but are most reliable on a spot basis only, and Saudi Arabia’s tolerance for Black Sea risk 5 months from now will be monitored with interest. The US$ remains weaker amid strength in the €uro and £Stg following the resignation of Liz Truss as UK Prime Minister. Crude is firm but off session highs, with the Dow up 50 points. The Dow has rallied just over 800 points this week.
  • US soybean export sales in the week ending Oct 13 totalled 86 million bu, 66 million were sold to China, vs. 27 million the previous week and the largest one-week total since mid-Oct a year ago. US soymeal sales were 542,000 mt. Both meal and bean commitments remain in line with the USDA’s forecast, and downward revisions to annual exports are not anticipated in WASDE’s Nov report, which in the short-term places more pressure on yield gains to boost projected end stocks. Exporters sold another 12 million bu to China and unknown destinations this morning. The US’s window to maximise exports will be closing rapidly beyond mid-December, but there has been a boost in world trade. We note that Canadian bean exports off the West Coast have been similarly strong.
  • Grain exports were far less exciting. Corn sales in the week ending Oct 13 totalled 16 million bu, vs. 8 million the prior week but sales must average 35 million bu/week to validate the USDA’s current target, which still appears to be 100-150 million bu too high. US wheat sales totalled 6 million bu, vs. 8 million the prior week. Wheat sales must average 11 million to meet the USDA’s forecast. Gulf HRW maintains a premium of $2.30/bu to comparable EU origin. US Gulf corn offers for Nov-Dec arrival are quoted $1.30-1.80/bu above S American origin. Gulf corn basis is up another $0.05/bu this morning and is prohibitively high.
  • Corn futures and cash prices have found support instead from rising ethanol margins the market’s need to shift supplies from the Eastern Midwest to deficit regions of the Plains. We do note that ethanol plant revenue this week is slightly above all costs.
  • The midday US GFS weather forecast continues to struggle with the placement and intensity of Central US rainfall due Oct 25-27. Midday output has shifted soaking rainfall westward into OK, eastern KS and MO, with totals there pegged at 2-4”. Confidence in forecast details is low. Drought relief lies ahead, but which regions benefit will be fine-tuned in the days ahead. A warmer temperature profile begins on Friday, with maximum readings across the Plains and Central/Western Midwest this weekend pegged in the 70s and 80s.
  • The S American GFS weather forecast is wetter in Central Argentina, with precipitation Sun-Wed estimated at 1-4” in Cordoba, Santa Fe and Buenos Aires, all key crop producing provinces. Here too the model is struggling with rainfall amounts and key will be whether the EU model adds precipitation to its Argentine outlook this afternoon.
  • The markets lack clear goals in the very short run. US soybean export demand improvement has followed rising pig producer margins in China. Corn is incredibly expensive in the export market but priced fairly in the biofuel market. We fear a more pronounced period of long liquidation Dec onward without S American weather threats.

19 October 2022

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  • HEADLINES: Wheat reverses overnight rally; Corn, soy lack conviction; Ethanol production still below last year.
  • Chicago grains are again steady to weaker at midday, with wheat reversing overnight gains and spot crude well below session highs. Flooding rainfall in Australia is this week’s only new supply threat as Argentine forecasts improve and export sales on Thursday morning are fully expected to show ho-hum interest for US supply on behalf of even traditional importers. Wheat’s inability to build upon Tuesday’s recovery noteworthy amid Putin declaring martial law in Ukrainian territories recently annexed by Russia and following a flood of diplomats leaving Ukraine in recent weeks. The corridor works until it doesn’t. There has so far been no change in aggressive Ukrainian corn and Russian wheat offers. The US$ is sharply higher at midday. Trade volume and enthusiasm is lacking.
  • Egypt’s GASC this week was in talks to secure additional supply for winter arrival, but no deal was made. This has pulled Paris milling futures from morning highs. Recall Egypt is no longer releasing public tenders. Close attention will be paid to whether Pakistan opts to pass on its tender announced this morning. Wheat importers are short-bought but wheat trade to date is down sharply year on year.
  • US ethanol production through the week ending Oct 14 totalled 299 million gallons, up 25 million from the previous week as maintenance season ends and plants have increasing access to new crop production. However, output last week was down 7% from the previous year and it remains that there has been no material/lasting improvement in gasoline consumption. Gasoline disappearance totalled 8.7 million barrels per day, down 10% year on year. Ethanol stocks are relatively abundant at 917 million gallons. Margins have turned highly profitable as Midwest cash corn prices erode, but there is just not the urgency to boost grind rates.
  • Similar to grain and soy, the energy market’s fears over future supply tightness has diminished despite OPEC’s late 2022 production cut and as total US crude stocks continue to retreat. The US has sold 160 million barrels of crude reserve stocks since April, with another 15 million barrels of reserve sales planned between now and Dec 31. We doubt crude can break below $80 in the near term, but key is whether supply and demand is balanced in late winter amid weak petroleum demand.
  • US soybean export sales through the week ending Oct 13 are estimated in a range of 40-50 million bu, enough to justify the USDA’s current annual forecast. Corn sales are pegged in a meagre range of 10-15 million bu, with sales projected at 7-12 million.
  • The US midday GFS weather forecast is wetter in the Delta and southern Midwest, with totals in the 6–10-day period of 1-3” offered to LA, AR, MO and IL. The location of this rain will work to aid Mississippi river levels slightly, but there remains debate over the amount and coverage. Midday Canadian model output keeps heavy rainfall Oct next Tues-Thurs further west and favours E KS, E NE and IA. There is general agreement that rain will miss the heart of the HRW Belt into Nov 1.
  • The S American GFS weather forecast is consistent in S America. Needed rainfall of 0.50-1.50” impacts key areas of Cordoba and Buenos Aires next week. Showers expand into Mato Grosso do Sul and Mato Grosso beyond the weekend. The S American weather outlook is non-threatening .
  • Wheat futures worldwide await clarity over Black Sea grain flows, which will be unavailable until the early part of November. Volatility continues. Row crops lack conviction as bullish seasonal trends and profitable domestic end user margins battle against a likely recession in 2023.

18 October 2022

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  • HEADLINES: Chicago weakens on US export demand worry; Cash soymeal basis drops sharply; Needed rain for Argentina in the forecast.
  • Chicago grains are lower at midday on the sagging prospect of US export demand while piles of corn/soybeans grow along water tributaries amid the historically low flows of the Mississippi River. The artery of US ag exports, the Mississippi River, is playing a bearish role in helping the US reach world importers. Gulf fob corn is trading $2.00 above S American offers, while Gulf HRW wheat is $3.25/bu above Russian/Ukraine offers. And in January, US fob soybeans will be $0.70/bu more expensive than Brazilian new crop offers.
  • US export potential is being lost and the market is reacting bearishly to the news. We note that WASDE cut combined US corn/soybean/wheat demand in last week’s October WASDE, with further cuts in export demand forecast in November. Chicago has a bearish feel amid the strong push ahead on the harvest and the weakening interior cash markets.
  • Chicago brokers estimate that fund managers have sold 7,200 contracts of corn, 3,900 contracts of wheat, and 4,600 contracts of soybeans. In the products, funds have sold 4,400 contracts of meal while buying 5,100 contracts of soyoil.
  • Cash meal basis in Decatur has been crashing for the past 10 days with offers even with December soymeal futures. The even money trade in spot cash soymeal to spot futures has NOT been witnessed since late 2021. The cash premiums of meal supported crush margins/soymeal values for the past year. The Mississippi River woes in shipping and rising costs of rail cars have pushed additional soymeal into the domestic market. At the same time, DGG prices are also in decline amid the high price of US corn.
  • Questions abound on the Ukraine Export Corridor; will Russian President Putin allow it to stay open or will it be closed or will there by restrictions on which countries that Ukraine can use these 3 seaports to export to. No one knows for sure, but our view today is that the corridor will not stay open as it currently is. Russia has asked for too many restrictions to allow Ukraine grain to flow into Europe/NATO members unfettered. Our lean would be the corridor will stay open to impoverished importers.
  • The midday forecast is consistent with a plume of rain for the E Plains into the Lake States starting next Tuesday. The W Plains/E Midwest miss most of the moisture. Unfortunately, this rain will not be assisting is raising Mississippi River flows. Tropical storm activity is absent in the Gulf with a pronounced warming trend starting Sunday. The US harvest should be able to push strongly ahead.
  • The S American midday GFS weather forecast is wet across Argentina/S Brazil with cumulative rains of 1-3.00”. The rainfall would be ideal for the start of active spring seeding and for reproducing winter wheat. Near normal rains continue across Northern Brazil with soybean seeding gaining speed. The forecast is favourable for early crop establishment.
  • Seasonal price trends are bullish, and the industry appears to be evenly split on whether the Russian/Ukraine export corridor will stay (as is) in late November. Until Putin decides on the corridor, a range trade is expected in Chicago grains. Soybean prices have downside price risk due a record large Brazilian soy crop. Don’t sell sharp breaks and don’t chase sharp rallies. Chicago grains are trading in a wide range into November. We see many wishing to sell wheat/corn/soy on coming large S American crops.