** It has been a mixed morning at the CBOT with the grains lower and the soy complex higher on pre report positioning and fund dealings. Funds are heavily long soy vs the grains on spreads, and they are pushing their case based on growing profits. Moreover, the USDA Nov Crop Report on Thursday is expected to confirm enlarged 2017 US corn yields with a decline in the 2017 US soybean yield. Pre report positioning is ongoing with resistance noted just above $10.00 in January soybeans while support rests under $3.46 in December corn. Chi December wheat remains bound in a range of; $4.10-4.30 ahead of 1st notice day and weak cash markets. ARC looks for existing midday trends to continue into the close, and for low volume trend to persist into Thursday. If prices are to move ahead of the Thanksgiving Day holiday, it will have to be post the report on Thursday and Friday.
** CBOT floor brokers report that funds have bought 3,500 contracts of soybeans, while selling 4,400 contracts of corn and 2,500 Chi wheat. In soy products, funds have bought 3,100 contracts of soyoil and sold 900 soymeal.
** Argentine President Macri is moving again to help farmers with a proposed tax break for fertilizer purchases/applications. Fertilizers would be tax deductable – a further incentive for Argentine farmers to plant more corn. There continues to be rumors that Macri could alter his proposed export tax reduction program for soybeans (.5% per month from January forward) due to elevated cash flow needs of the Gov’t. No confirmation of the soy export tax rumors are offered, but a similar change occurred last November. The Argentine Gov’t continues to bet on its farmers to raise its GDP rate.
** The USDA reported new US export sales of 130,000 MTs of corn for delivery to an unknown destination for the 2017/18 crop year.
** Argentina is now exporting 500,000 MTs of Bio diesel to the EU as it supplants the US as destination for its excess soyoil production. US analysts had expected that the US’s placing a duty on Argentine bio diesel would drop their domestic soyoil prices to levels that would slow US soyoil exports. Like all US grains and oilseeds, there has been a slowing of the US soyoil sales pace, but not the degree that cap US soyoil rallies.
** Black Sea fob wheat values are slipping as active shipments continue from Russia. And the weather forecasts hint that Russian loadings will remain active for another 14 days. 17/18 Russian wheat export estimates are rising and could reach 34-35 MMTs with favorable weather conditions into December. The US wheat export opportunity is now limited to; January,February & March.
** Midday GFS South American Weather Update: The forecast is drier for C and S Brazil with rains of just .25-1.25” over the next 10 days. And Argentina (outside of Buenos Aries) will also see limited rainfall. The drying trend will help accelerate the spring seeding pace, but rain will be needed beyond Nov 20th from preventing soil moisture from reaching short or very short levels. The good news is that no extreme heat is forecast.
Rains will persist across N Brazil for the rest of the week before a drying trend evolves. 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 largely favorable assuming that the rains return in the 11-15 day period across Argentina and S Brazil?
** 10 Day GFS Rainfall estimate for South America:
** AgResource Market Comment: Pre report bets are being placed (bullish soy/ bearish grains) as South American weather forecasts are not straight forward favorable with La Nina building rapidly. There will be weather scares. The big question is who is going to sell the grains to new lows? Farmers are not interested in selling cash corn at these prices and funds are heavily short?
