** Higher in moderate volume has been the CBOT with corn, soybeans and wheat holding in the green at midday. Fund managers are on the buy side of the grains as they further trim net short positions while adding length in soybeans as January futures push against psychological resistance at $10.00.
It’s important to point out that the CBOT rally is based largely on fund flows and technical considerations ahead of next week’s USDA November crop report. The CBOT has a firm feel and is likely to close higher. Unlike the October report, it feels like the market wants to place some premium in price just in case yields decline. Traders are still smarting from the October report and the sharp post report rally in soybeans.
** CBOT brokers estimate that funds have bought 7,000 contracts of corn, 2,000 contracts of Chi wheat, and 3,800 contracts of soybeans. The fund demand in soybeans is slowing on the advance. In soy products, funds have bought 2,800 contracts of soymeal and 3,000 contracts of soyoil during the day session. Funds sold an estimated 2,000 contracts of oil overnight.
** Informa estimated the 2017 US corn yield at 173.4 BPA with a crop of 1,410 Mil Bu (up 130 Mil Bu from NASS in October) with a US soybean yeild of 49.7 BPA with a crop of 4,447 Mil Bu (up 16 Mil Bu). The Brazilian soybean crop was left at 111.0 MMTs with Argentina at 55.0 MMTs. The Informa estimates are bearish for corn and soybeans should NASS/WASDE confirm them.
** US export sales for the week ending October 26th were; 12.8 Mil Bu of wheat, 31.9 Mil Bu of corn, and 72.3 Mil Bu of soybeans. For their respective crop years to date, the US has sold 570 Mil Bu of wheat (down 29.1 Mil Bu or 5%), 670.4 Mil Bu of corn (down 304 Mil Bu or 31%), and 1,116 Mil Bu of soybeans (down 211 Mil Bu or 16%). The US sales pace of wheat, corn and soybeans remans disappointing and a reduction in annual US corn and soybean export estimates are likely forthcoming in future WASDE reports.
** FAS announced the sale of 1,356,360 MTs of US corn to Mexico. The sale was big and caught the market by surprise. A total of 845,820 MTs of corn will be for the 2017/18 crop year with 510,540 MTs for the 2018/19. Some fear that Mexico could be heavily booking US corn amid a fear that modifications in the NAFTA agreement could be forthcoming.
** India is likely to raise their import duty on vegoil imports to help their local producers. The new duty could be as much as 10%. Also, India is considering providing an export subsidy on soymeal to help it compete against cheap South American offers.
** Midday GFS South American Weather Update: The forecast is little changed from prior day runs with heavy rainfall expected across all of Brazil with reduced totals across Argentina. The forecast offers rainfall totals of 2-6.00” of rainfall for Brazil with localized heavier totals. Argentina will dry out beyond Friday with planting to speed ahead thereafter.
No extreme heat is offered with cool 70’s and 80’s offered for Brazil and much of Northern Argentina. The lack of heat and some rain offer mostly favorable growing conditions. GFS 10 day rainfall totals is attached.
** AgResource Market Comment: It’s been a technical CBOT rally with funds covering grain shorts and adding to their longs in soybeans. ARC research argues that the CBOT rally will run out of steam as Dec ’18 corn futures nears $4.00 and Nov ‘18 soybeans rise to $10.10. It’s the back end of the market (rather than the front end) that looks to cap the advance on forward hedge sales. The CME’s plan to allow Ag block trading is receiving poor marks amid liquidity concern. Producers should be preparing for forward corn sales if March futures rise to $3.70-3.75.
** 10 Day GFS 10 Day North American Rainfall Forecast: