** Low volume and slightly higher as been the CBOT this AM. The grains were the bullish leader to start, but soybeans have been the new upside leader at midday as traders think ahead to the USDA report on Thursday. NASS is expected to raise US corn yield, but could cut soybeans based on the sharp fall off of yield data across the N Midwest. Moreover, China’s 2016/17 all origin soybean imports should be raised to 93.5 MMTs which could bump up the current crop year by 1-2 MMTs. And India’s soybean crop should be lowered due to the sporadic summer monsoon. ARC would also mention that Russian and Ukraine corn yields are coming in far below WASDE forecasts which could trim their production by 3-5 MMTs. The lower Black Sea corn production/exports will prevent WASDE from cutting US corn exports for 2017/18. So, funds and traders will continue to favor soybeans vs the grains on spreads into the report. That is being reflected in CBOT values at midday.
** CBOT floor brokers report that funds have bought 3,400 contracts of corn, 2,900 contracts of wheat, and 3,200 contracts of soybeans.
** Weekly FGIS exports for week ending November 2th were; 17.5 Mil Bu of corn, 91.5 Mil Bu of soybeans, and 10.4 Mil Bu of wheat. The grain export pace is disappointing and highlights the struggles that US exporters are having selling/exporting grain. US soybean exports were 7 Mil Bu less than last year and are falling behind the pace needed to reach the annual WASDE forecast. US soybean exports are down 9% while the USDA is forecasting an annual gain of 3.5%. However, its still early in the 2017/18 crop year.
** For their respective crop years to date, the US has exported 218 Mil Bu of corn (down 182 Mil Bu or 46%), 545 Mil Bu of soybeans (down 54 Mil Bu or 9%), and 420 Mil Bu of wheat (down 27 Mil Bu or 6%). Combined US all crop exports for the week were 36 Mil Bu lower than the same wheat last year, or nearly 1 MMTs. For a crop year, US all crop exports are down 7.4 MMTs or 272 Mil Bu. The total export loss is growing, concerning for US producers.
** World barley prices have been trading above wheat for at least a month as Russian exporters concentrate more on wheat. World barley prices are the hot grain market with values trading above $200/MT. If the Russians are to export 35 MMTs of wheat, its barley/corn shipments that will suffer.
** PA Governor Tom Wolf has asked to the EPA to lower 2017 and 2018 biofuel mandates due to economic harm they are producing. However, the US courts found no economic damage in prior mandates in a ruling this summer. This makes it tough for the EPA to grant Wolf’s lower mandate request.
** Midday GFS South American Weather Update: The forecast is little changed from prior runs with heavy rain to fall across N Brazilian soy crop areas with totals of 2-7.00” in the next 10-14 days. A front will stall across N Brazil which looks to produce the daily chance of showers. Reduced rain totals are forecast across S Brazil and Argentina with an increase in showers in the 11-15 day period. Temps look to average below normal for the next 7 days with some 90’s creeping into S Brazil and Argentina on the weekend (and beyond). The forecast is deemed as largely favorable assuming that the rains return in the 11-15 day period across Argentina and S Brazil?
** 10 Day GFS Rainfall Forecast for South America:
** AgResource Market Comment: The Brazilian real and Russian ruble are down about 1% vs the US dollar which is offering support to soy/wheat. The EPA is expected to announce its new 2019 Biofuel mandates by November 30th. ARC looks for the EPA to hold to prior targeted levels. ARC would see any break below $.335 basis spot CBOT soyoil futures as a buying opportunity. Iraq has secured 500,000 MTs of US HRW wheat, but Russia continues to export large quantities amid favorable loading weather. Seasonal price trends are positive into early December.
