AgResource Daily Farm Marketing Advice for Tuesday: 1/Corn Producers: Sell 10% of the estimated ‘18 corn harvest at $4.01 basis Dec 2018 futures. 2/ Corn Producers: Sell 10% of estimated ‘19 corn production at $4.17 basis Dec 2019 futures. 3/ Corn Producers: Sell 15% if the 2017 corn crop is March 2018 corn futures reach $3.72.
It’s been a mixed morning in Chicago, with grains steady and the soy complex slightly lower. Soy oil has held in decently following an announcement that the US Commerce Department has set preliminary 50-70% anti-dumping duties on Argentine & Indonesian biodiesel (which Indonesia will contest), but the pace of soy harvest and soon-to-improve Brazilian weather has weighed on the market. Note that the EIA’s monthly biodiesel production report will be released next Tuesday.
Outside markets, too, are mixed. EU milling wheat futures have extended overnight losses amid modest strength in the euro, and as France, in particular, is struggling to find export demand. Crude is up $.50/barrel, testing $52.50, and Wednesday AM’s weekly energy report is likely to find yet another contraction in US crude & gasoline supplies. US crude inventories (less strategic reserves) in last week’s release were pegged at 457 Mil Barrels, a new low for 2017 and down 3% from a year ago.
Also key in Wednesday’s EIA report will be whether residual disappearance is sustained, as non-domestic ethanol use has expanded in the last two weeks. ARC mentioned on Monday that Brazilian ethanol premiums to US origin have risen rather quickly. There’s talk now that mills in Brazil are processing more cane for ethanol as ethanol prices there are far more attractive than sugar prices. Ethanol exports are desired following a series of US corn yield hikes.
Otherwise, wheat and corn futures are again flirting with major moving averages, and a close above $3.53, basis Dec corn, and $4.37, basis Dec CME wheat, would further confirm secondary bottoms were scored last week. Nov beans appear bound to a range of $9.60-10.00.
The midday US forecast is cooler and a bit wetter in the 6-10 day period. According to the GFS, the season’s first Central Plains snowfall is due next Wed-Fri, which if realized could slow wheat development in CO, KS and pockets of the OK panhandle. The GFS is likely too cold next week, but a close eye will be kept on temps moving forward. Note that early season snow cover tends to sustain below normal temps.
Funds are estimated to have bought a net 500-1,000 contracts of wheat & corn, and have sold a net 4,500 contracts of soybeans.
Midday GFS South American Weather Update: The GFS in South America maintains a the shift to better rainfall in Brazil is imminent, but is much spottier with soaking rainfall in Mato Grosso through the next 10 days. The heaviest totals have been shifted eastward into Goias and Minas Gerais, where it’s needed badly, but totals in Mato Grosso are pegged at just .75-2.00”. This is enough to speed along planting and germination, but regular rain will be demanded by mid-November. Too much rain will fall across Argentine into mid/late next week, but there are signs of sustained dryness thereafter.
AgResource Market Comment: Fresh input is needed! There’s no doubt ample stocks of corn, wheat and soybeans, but funds are heavily short grains, and only modestly long beans, meal and oil. Traders will be increasingly loathe to take new positions until more is known about South American weather in Dec-Jan. Expect ongoing choppy trading.