** The grain bears have sold heavily to push corn/wheat values lower, which initially dragged soybeans down. However, strong export demand for soybeans and narrowing cash basis bids have pushed beans back higher at midday. The market has a mixed feel going home with fund managers continuing to push the grains lower. Funds are quickly approaching a net short corn position of 200,000 contracts and net short of over 90,000 contracts in Chi wheat.
** It’s hard to get your head around it, but how can US corn yield keep climbing and US soybean yields keep falling? This tug and push of row crop yield is likely to keep CBOT trade sideways into the November USDA crop report. ARC sees no good reason for December corn to fall below $3.40 nor January soybeans to rise much above $10.10 until after the November report and yield gains or losses are determined. US farmers are slowed their soybean sales on the yield decline which is starting to narrow cash basis.
** CBOT floor brokers report that funds have sold 8,000 corn & 6,000 wheat. Funds have sold 1,100 contracts of meal and bought 900 contracts of soyoil, while being flat in soybeans (sellers early and buyers midday). The funds want to be long of soy and short of grains and we don’t see a reason to argue with this market stance.
** FC Stone and Informa will be out with their crop estimates on Wednesday afternoon and Thursday AM. The yield estimates are expected to lean lower on soybeans and higher on grains. The last half of the US soybean harvest has been yielding below the first half of the harvest due to later planting dates and the impact of acute September dryness. Corn appears to have weathered better (than soybeans) due to its deep root system and slow dry down prior to the harvest. The US corn harvest is the 4th slowest on record, which historically correlates to high yields.
** Russian wheat exports for October look to reach to 4.0 MMTs – a record! Through the crop year to date, Russia has exported 12.4 MMTs of wheat, which is up 23% from last year. The odds are growing that Russia could export 34-35 MMTs of wheat in 2017/18, which is one reason why CBOT December wheat fell to new contract lows this AM. The Russians are exporting wheat faster than expected which could harm US/EU and Argentine trade.
** The Brazilian export board will meet on Nov 8th to decide if it will approve 750,000 MTs of tax free wheat imports (likely from the US HRW).
** Midday GFS South American Weather Update: The forecast is drier for Argentina/RGDS from recent days and the overnight run. Rainfall totals are reduced to .25-1.00” with a frontal pass late Thursday/Friday. Rain chances thereafter are limited. N and C Brazil rainfall chances remain solid with totals of 1-5.00”. No extreme heat is noted with highs ranging from the lower 80’s to the mid 90’s. There are hints of warming temps and some high pressure Ridging across Argentina during the 11-15 day period.
** AgResource Market Comment: Traders are selling grain and buying soy heading into private crop estimates that are due in coming days. Chi wheat has scored new contract lows, while December corn is targeting $3.40 prior to the USDA November report. Beans must hold its premium based on the importance of the South American growing season and that China is taking on larger imports at current cheap prices. We like beans vs corn.
** 10 Day South American Rainfall Forecast:
