AgResource Daily Farm Marketing Advice for Wednesday: 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 if March 2018 corn futures reach $3.72.
Pre-report positioning remains the AM theme at the CBOT with soyoil futures breaking out to the topside on the charts. December soyoil futures has surged to new rally highs (above the late October top at $35.13) with the next upside price target being the late summer highs at $36.00. The rally in soyoil has supported soybean futures as funds continue to use the soy complex as their long peg. Corn and wheat futures are sagging on large crop ideas and a continued sag in world wheat values. The grains lack a story, but if the USDA does not shock traders with a bearish corn yield on Thursday morning, fund managers appear to be willing to take profits off the table with energy prices rising on Mid-East political tensions.
CBOT floor brokers report that funds have bought 2,300 contracts of soybeans, while selling 4,100 contracts of corn and 3,200 contracts of Chi wheat. In soy products, funds have bought 2,900 contracts of soyoil while selling 1,900 contracts of soymeal. ARC estimates that funds are net short a record 220,000 contracts of corn and 124,000 contracts of Chi wheat.
GASC purchased 120,000 MTs of Russian wheat for late December shipment at $196.50/MT which in using $13.50/MT for transit, works back to a CIF price of $210/MT. The landed price is down $2.00 from recent purchases and reflects the softening price structure in world wheat values. The EU is becoming more aggressive in its fob wheat offers as its need to raise exports is increasing. The net result is that the US’s export window of opportunity is narrowing with favorable weather offered for Black Sea grain loadings for a few more weeks.
Plains feedlots capitulated on cash cattle sales this week with trade active at $124/CWT, down $2.00 from values late last week. The trade is a disappointment for cattlemen that were hoping for $128.00 activity. Next week is that last full week before the US Thanksgiving Day holiday, so the weaker trade is not what the bulls were hoping for. A top is likely forming in CME cattle futures, with February nearly reaching $132.00.
US ethanol production was equal to last week at 1,057,000 barrels/day. This would consume some 311 Mil Bu or corn – just below the prior all time record set in 2016. Weekly US ethanol stocks fell 3 Mil gallons to 897 Mil, but the total was still up 11% from last year. US unleaded gasoline stocks at 209.5 Mil barrels, are down 5% from last year, while US crude oil stocks are down 6% from last year at 455 Mil barrels.
Midday GFS South American Weather Update: The forecast is little changed from the overnight run with 10 days of drier than normal weather for S Brazil and N Brazil. 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 precip is below.
AgResource Market Comment: Very near term direction will be provided by the USDA’s updates on Thursday, but as mentioned previously any post-report break will bought, and any rally will be sold by the farmer. Until more is known about South American potential (in January) choppy, sideways trade will persist. Strength in energy markets is noteworthy, though.
